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Al-Kazemi’s advisor: The emergency support law has entered into force


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 2022-06-21 01:23
 

Shafaq News/ Today, Monday, Finance Minister Ali Allawi directed the Agricultural Cooperative Bank to postpone the payment of debts owed by farmers for a period of two years.

A statement by the Information Office of the Ministry of Finance quoted Allawi as saying; "Based on Article Thirteen of the Food Security Law, it was decided to postpone for a period of two years the payment of government debts owed by peasants and farmers who wish to postpone the payment of loans and whose loans do not exceed 400 million dinars from the loans of the Agricultural Bank and the Agricultural Initiative in all governorates of Iraq."

He added that "the text of the paragraph also included not charging these debts any interest during the delay period."

And the House of Representatives voted earlier on the Food Security Law in the amount of 25 trillion dinars.

This action comes within the framework of the ministry's policy aimed at supporting farmers and farmers and enhancing the capabilities of providing local products, as well as assigning plans and directions to achieve food security, especially in light of the repercussions of the current global economic crisis.

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The Iraqi Minister of Planning discusses with the governors the mechanisms for implementing the emergency suppor t law

The Iraqi Minister of Planning discusses with the governors the mechanisms for implementing the emergency support law
The Minister of Planning chairs a meeting of governors to discuss mechanisms for implementing the emergency food security support law
 

Mubasher: The Iraqi Minister of Planning, Khaled Battal Al-Najm, chaired an expanded meeting of all governors; To discuss the development of appropriate mechanisms to ensure the implementation of the Emergency support Law for Food Security and Development, which the House of Representatives recently voted on.

During the meeting, which was attended by the head of the Supreme Coordinating Committee for the Provinces, Aqil Khazali, according to a statement by the Ministry of Planning, a number of issues and files related to the reality of the ongoing projects within the regional development program were discussed, and work to provide better conditions to expedite the implementation and completion of these projects.

The minister stressed that the ministry has taken the appropriate measures to ensure the payment of the contractors' dues, calling on the contractors who have financial dues to expedite the completion of the project work so that their dues are disbursed as soon as possible.

The Minister stressed the importance of redistributing the revolving secretariats in the governorates to the ongoing projects; To complete those projects instead of entering into new financial commitments.

With regard to the lagging and stalled projects, the Minister of Planning explained that now is the time to resume work in them because of their service and development importance, noting that the financial allocations can be provided, and the work of previous decisions that suspended projects during the past years, expressing the ministry’s readiness to provide all Possible types of support for the governorates in order to ensure the implementation of projects at a higher pace.

For their part, the governors reviewed the reality of the projects implemented in their governorates, and the problems and challenges facing their implementation, proposing solutions and possible treatments, especially those related to the lack of financial allocations that led to the suspension and reluctance of a number of important projects.

The meeting was attended by the two undersecretaries of the Ministry of Planning, the Director General of Government Investment, the governors' deputies and assistants, and the directors of the planning departments of the governorates.

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 Baghdad: Farah Al-Khafaf 
After the approval of the Emergency support Law for Food Security and Development in the amount of 26 trillion dinars to keep pace with important matters in the country, the most important question remains where will the fate of billions of dollars of the abundance achieved from the rise in crude oil prices, and where they will be invested, especially with expectations that (financial abundance) will reach 10 - $20 billion during the current year, amid calls to approve the budget to invest financial revenues, and to establish a hedge account or a sovereign fund.
 
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, told “Al-Sabah”: “Since there is no budget, the exchange system is based on the Federal Financial Management Law No. 6 of 2019, the amended, and in this law the exchange is according to the 12/1 system of actual current expenditures. that took place in the year 2021.
He added that “the cash flows that came from selling oil came in two ways, the first is an increase in export quantities and the other is an increase in prices, as prices increased by about 40% from last year, and this increase means that there are 40% financial savings until the end of the year when committing to spending in the 12/ formula 1 until the end of the year, assuming that the general budget for the year 2022 is not approved,” noting that “under the emergency support law, it covered about 60% of the expected savings, that is, if the expected $40 billion, more than half of it will go to cover the expenses of the law.”
Prime Minister Mustafa Al-Kazemi had confirmed that the government is working with all its efforts, and it needs budget and stability in order to proceed with its projects to serve the citizen and stabilize the living conditions of citizens. 
And the financial advisor suggested that “the current fiscal year, in light of the legality of the exchange, ends with financial savings, with expectations of 10 to 15 billion dollars in a hedge account, because if there was a budget, it would have been called a “sovereign fund”, but because there is no budget, it could be.” A hedge account, or an “opening balance” in the next year’s budget 2023.
He also stressed the importance of “having a budget, even if approved after the middle of this year, to meet many important needs from these savings for the benefit of Iraq and the people, and to implement development projects, to contribute to raising the growth rates of the gross domestic product beyond population growth rates and achieving sustainable development rates and a continuous economy.” “. 
 
Emergency law is not an alternative
It is noteworthy that Finance Minister Ali Allawi confirmed that “the emergency security law cannot be a substitute for the budget law for 2022,” noting that “the general budget for 2022 was prepared by the Ministry of Finance last March, according to the calculation of the price of a barrel of oil at $60, with a total amount of up to to 150 trillion,” while noting that “Iraq does not have a financial glut because export revenues will be received after three months, and the increase in abundance may start from now, up to two billion dollars per month, and that part of the financial abundance will be invested in the nucleus of a stable sovereign fund to address crises, and prevent The repetition of the shock that occurred in the late payment of salaries previously, as Iraq is now in a good financial position, and the foreign currency reserve will amount to 80 billion dollars, which gives the possibility to cover Iraq’s need for imports for a year.” 
 
Abundance in the state treasury
For his part, Jamal Kougar, a member of the Parliamentary Finance Committee, told Al-Sabah: "The sums generated from the abundance will remain in the government's treasury."
He added that “the government cannot spend one dinar without a legal cover in the absence of a budget,” noting that “the failure to invest these funds affects the Iraqi economy, because the government is disbursing the mechanism 12/1, and this means that almost all projects and ministries will stop and there will be No production, except for what is included in the Emergency support for Food Security and Development Law.
He continued, "If these funds go to the state treasury, it will benefit from it in any future budget, because when determining the budget, its amounts come from the resources of selling oil, the money that the government has and the loans that it resorts to," noting that "the state's resources are with the public treasury." The government can use it in future budgets.” 
 
Establishing Sovereign and Generational Funds
The Minister of Finance recently confirmed that “to maintain the spending ceiling, it is preferable to legislate a law under the name of the Generations Fund, but if this is not possible, the Ministry of Finance has the ability to manage it implicitly according to the available liquidity.” 
In turn, the financial expert, Thamer Al-Azzawi, saw the importance of establishing sovereign funds to face any emergency.
In a statement to "Al-Sabah", Al-Azzawi criticized "the methods of disbursement followed by government agencies when achieving financial savings, as they accelerate either by opening appointments or allocating huge amounts to non-productive or useless projects," calling for the importance of investing these savings in investment projects and to enter The state engages in partnerships, strengthens its strategic reserves, and creates funds for generations.”
Al-Azzawi predicted that the fiscal year would end with a financial abundance of between 15 to 20 billion dollars or more, according to the selling prices of crude oil in international markets.
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The Iraqi Finance Minister confirms the keenness to implement the paragraphs of the emergency suppor t law

The Iraqi Finance Minister confirms the keenness to implement the paragraphs of the emergency support law
Iraqi Finance Minister, Ali Abdul Amir Allawi
 

Mubasher: The Iraqi Finance Minister, Ali Abdul Amir Allawi, confirmed today, Wednesday, that the ministry is keen to implement the provisions of the Emergency support Law for Food Security and Development, which the House of Representatives voted on recently, including Article (18) first.

Allawi added, according to a statement by the Ministry of Finance, that the aim of presenting this law is; It is to cover the actual financial needs that contribute to alleviating unemployment, reducing poverty and achieving financial stability, in light of urgent global developments, and continuing to provide the best services to citizens and raise the standard of living for them.

The Minister of Finance clarified that the ministry is committed to financing all the allocations mentioned in Table (A) of the law; To secure the food and electricity sectors, lecturers, administrators, contracts, employees, graduate degree holders and graduates from among the first and whose contracts have been terminated by the security and military agencies.

And the Iraqi parliament voted, earlier, on the food security law in the amount of 25 trillion dinars.

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The Minister of Finance sets the objectives of the emergency support law: they are obligated to fund the assignments of lecturers and contracts
  
{Economist: Al Furat News} Finance Minister Ali Abdul Amir Allawi confirmed today, Wednesday, that the ministry is keen to implement the provisions of the Emergency support Law for Food Security and Development, which the House of Representatives voted on recently, including Article (18) first.

 Allawi said in a statement received by {Euphrates News}, "The ministry is committed to financing all the allocations mentioned in Table (A) of the law to secure the food and electricity sectors, lecturers, administrators, contracts, procedures, graduates from the first and whose contracts have been nullified by the security and military services."

Allawi added, "The aim of presenting this law is to cover the actual financial needs that contribute to alleviating unemployment, reducing poverty, achieving financial stability in light of urgent global developments, and continuing to provide the best services to citizens and raising the standard of living for them."

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 2022-06-22 10:24
 

 

 

Shafaq News/ The financial advisor to the Prime Minister, Mazhar Muhammad Salih, revealed today, Wednesday, that the government has "relative" control over the prices of fuels and foodstuffs in the country, and while he indicated that the Food Security Law will support this, he stressed that monetary policy is able to curb inflation.

 

Saleh said in an interview with Shafaq News Agency, "The cash flows in foreign currency to Iraq are high and it is in the hands of the government and is considered one of the important things to support prices," noting that "the emergency law's function is to support prices, reduce and confront inflation and maintain the standard of living and cash income from high prices of foodstuffs and fuels." ".

 

Saleh added that "fuels in Iraq, some of them are imported, and their prices are fixed as a result of the support, although the world's gasoline prices are doubling, but there is support for these prices, as is the case with the ration card."

 

The financial advisor to the government indicated that “there is relative control over prices, and the emergency law will support this control over prices, and there is control over inflation that is based on financial policy tools,” adding that “in the event that prices develop, the reserves of high hard currency and monetary policy will interfere with its tools in a way It is more effective to stop or limit any price hike.”

 

Saleh pointed out that "the prices are still controlled by government support such as fuel and foodstuffs, and all government services have fixed prices and there is zero for customs, and taxes have been greatly reduced."

 

For his part, the Minister of Finance said in a statement received by Shafaq News Agency that "the emergency support law for food security and development came to reduce poverty and achieve financial stability," noting that "the ministry is keen to implement the paragraphs of the emergency support law for food security and development, which the House of Representatives voted on recently." .

 

 

 

Allawi explained that "the ministry is committed to financing all the assignments listed in Table (A) of the law to secure the food and electricity sectors, lecturers, administrators, contracts, procedures, holders of higher degrees and graduates from among the first whose contracts have been terminated by the security and military services."

 

The minister added that "the aim of presenting this law is to cover the actual financial needs that contribute to alleviating unemployment, reducing poverty, achieving financial stability in light of urgent global developments, and continuing to provide the best services to citizens and raising the standard of living for them."

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2 hours ago, yota691 said:

Allawi added, "The aim of presenting this law is to cover the actual financial needs that contribute to alleviating unemployment, reducing poverty, achieving financial stability in light of urgent global developments, and continuing to provide the best services to citizens and raising the standard of living for them."

raising the standard of living !

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Minister of Finance: The ministry is keen to implement the paragraphs of the Emergency support For Food Security and Development Act

983857-d9cd7bcf-34ce-466d-a89f-1357cbc0e
Baghdad/ Finance Minister Ali Abdul Amir Allawi said the ministry is keen to implement the provisions of the Emergency support for Food Security and Development Act, which was recently voted on by the House of Representatives, including Article 18 first.

"The ministry is committed to funding all allocations contained in table A of the law to secure the food and electricity sectors, lecturers, administrators, contracts, procedures, graduates from the first and most copied contracts from the security and military services," Allawi said in a statement.

"The aim of the introduction of this law is to cover the actual financial needs that contribute to reducing unemployment, reducing poverty and achieving financial stability in light of the global emergency developments and to continue to provide the best services to citizens and raise their standard of living," he said.

 
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Hows about jumping from " keen " to implementing NOW....I'd be keen to see that... that's if it's not too much trouble. 

Let's not talk forever and day on this like everything else you gotta blather on incessantly on until you put us all into a coma.

Wow, I guess I am a might grumpy after all today. Don't know why: I've only been waiting 19 years. 😆

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1 hour ago, horsesoldier said:

Hows about jumping from " keen " to implementing NOW....I'd be keen to see that... that's if it's not too much trouble. 

Let's not talk forever and day on this like everything else you gotta blather on incessantly on until you put us all into a coma.

Wow, I guess I am a might grumpy after all today. Don't know why: I've only been waiting 19 years. 😆

My 15 years feels somewhat like your 19 years

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7 hours ago, 6ly410 said:

Minister of Finance: The ministry is keen to implement the paragraphs of the Emergency support system" rel="">support For Food Security and Development Act

Wednesday, June 22, 2022 19:31 | EconomicReadings: 12

Minister of Finance: The ministry is keen to implement the paragraphs of the Emergency support system" rel="">support For Food Security and Development Act (ninanews-com.translate.goog)

983857-d9cd7bcf-34ce-466d-a89f-1357cbc0e
Baghdad/ Finance Minister Ali Abdul Amir Allawi said the ministry is keen to implement the provisions of the Emergency support system" rel="">support for Food Security and Development Act, which was recently voted on by the House of Representatives, including Article 18 first.

"The ministry is committed to funding all allocations contained in table A of the law to secure the food and electricity sectors, lecturers, administrators, contracts, procedures, graduates from the first and most copied contracts from the security and military services," Allawi said in a statement.

"The aim of the introduction of this law is to cover the actual financial needs that contribute to reducing unemployment, reducing poverty and achieving financial stability in light of the global emergency developments and to continue to provide the best services to citizens and raise their standard of living," he said.

 


:bravo: Hey, while he’s being so bloody smart, why doesn’t he go ahead and throw in the implementation of all the paragraphs in the constitution! Wouldn’t that be something! :lmao::lmao::lmao:

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8 hours ago, 6ly410 said:

"The aim of the introduction of this law is to cover the actual financial needs that contribute to reducing unemployment, reducing poverty and achieving financial stability in light of the global emergency developments and to continue to provide the best services to citizens and raise their standard of living," he said.
 

lets hope this brings a rate change of some sort, after 19 years we all need it

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Parliamentary source: Food security has entered into force since its approval, and finance has begun to work with it
  
{Local: Al Furat News} A parliamentary source said, on Tuesday, that the emergency food security law has entered into force since its approval, pointing out that the Ministry of Finance has begun implementing it.

The source said in an exclusive interview with {Euphrates News} that "the emergency food support law entered into force starting from the date of voting on it according to a legal article included in the law," noting that "in this case, the issue of approval by the Presidency of the Republic has become a formality, and on this basis the Ministry of Finance began Working with the law, bearing in mind that the legislative recess does not affect the work of the Council, and many committees continue to work and meet.” 

On June 8, the House of Representatives voted on the proposed emergency support law for food security and development.

The law aims to achieve food security, reduce poverty, achieve financial stability in light of urgent global developments, continue to provide services to citizens, raise the standard of living for them after the budget law expires, create job opportunities, maximize Iraqis’ benefit from state resources, advance development, and resume work on stalled and lagging projects due to lack of funding. The implementation of new projects of importance.

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Parliamentary Finance: Financial abundance will go to the Food Security Act!

Parliamentary Finance: Financial abundance will go to the Food Security Act!
Last Updated Jun 29, 2022 - 10:24 AM

Baghdad/ Iraq News Network - The parliamentary finance committee confirmed Wednesday that the inclusion of surplus oil revenues under the Emergency support for Food Security and Development Act is normal in economic transactions.

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The emergency suppor t law enters into force .. Will the government challenge it?

 

 

332 Economie 06/30/2022 10:55 Baghdad today -

Baghdad Today, Thursday, Adviser to the Prime Minister for Financial Affairs, Mazhar Muhammad Salih, announced the entry into force of the Emergency support Law, after more than fifteen days had passed since its enactment. Saleh told (Baghdad Today), "The law stipulates that there is a group of deputies requesting the legislation of a law within the parliament that does not have a financial aspect." He added, "The law has that aspect, but the government will not object or challenge it in the Federal Court because it needs its paragraphs and is linked to the payment of dues to ministries and citizens, such as contracts and others." On the eighth of this month, the Iraqi parliament voted on the law on emergency support for food security as a whole, to enter its legislative recess . The vote was attended by 273 deputies, headed by the Speaker of the Council, Muhammad al-Halbousi.

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Finance circulates the contracting form with certificate holders in accordance with the emergency support law (documents)
 

Baghdad - people   

The Ministry of Finance issued a circular to the governorates regarding the mechanisms of contracting with graduates in accordance with the Law on Emergency support for Food Security and Development recently approved by the House of Representatives.   

  

  

According to documents, a copy of which was received by “Nass” (July 2, 2022), it allocated 1,000 contracts to each of the governorates that are not organized in a region, and a monthly salary of 300,000 dinars per contractor for a period of three years for development and training purposes.   

  

The Ministry has set the admission criteria, which are as follows:   

  

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me_ga.php?id=38445  

me_ga.php?id=38446  

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 Baghdad: morning 
 
The Chairman of the Federal Public Service Council, Mahmoud Al-Tamimi, discussed with a delegation of contract representatives the decision to install them on the permanent owner.
Meanwhile, departments and institutions in Baghdad and the provinces continue to complete administrative procedures related to the installation.
A press release of the Federal Service Council stated that the meeting of the Chairman of the Council with contract representatives witnessed a discussion of the decision to confirm those who have a service of no less than two years, according to what was stated in the Security Law
 food. Al-Tamimi stressed, according to the statement, that the council is keen to implement what is stated in the law as soon as instructions from the Ministry of Finance arrive.
In the same regard, the governor of Al-Muthanna, Ahmed Manfi Judeh, said during a press conference attended by Al-Sabah: The governorate has completed the lists of fixing contract holders to permanent owners who have two years of service or more. 
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The Minister of Commerce confirms the stability of food security and strategic storage
  
{Economic: Al Furat News} The Minister of Commerce, Alaa Al-Jubouri, confirmed the stability of food security and strategic storage.

A statement by the ministry, which the agency {Euphrates News} received a copy of, stated that al-Jubouri received in his office today, Wednesday, the second deputy speaker of the House of Representatives, Shakhwan Abdullah, to discuss a number of files, the most important of which is the disbursement of dues to the farmers of the Kurdistan Region for the past years, the preparation and receipt of food basket items, flour and control procedures regarding processing and receipt. The
Minister of Commerce stressed "the importance of cooperation between the legislative and executive authorities in a way that contributes to the development of government performance, which in turn will be reflected in the work of various sectors, and this is in the service of citizens."
He pointed to "mobilizing all efforts and energies in the ministry in order to deliver foodstuffs to the citizens and follow up the agents on a daily basis through the control committees, urging them to communicate with the citizens" and speeding up their supply of food basket items and flour, and this contributed to the stability of food market prices in all governorates, noting that there are A global rise in wheat and food prices.”
Al-Jubouri added, “After approving the food security law and providing funds, there is no problem in securing food security in the future,” stressing at the same time that “his ministry is seeking with the relevant authorities to resolve the file of farmers’ entitlements for the past years and in cooperation and coordination with the region to resolve this file.”
The two sides discussedA number of files, the most important of which are the marketing season, receiving this year's wheat crop, securing the entitlements of farmers and marketers, as well as ensuring food security, and the ministry's effort to develop work in all its sectors.

 

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Parliamentary Finance sets the date for approving the new salary scale

 

 

3,888 Policy 2022/07/07 15:36 Baghdad today _

Baghdad Today, Thursday, the Parliamentary Finance Committee commented on the existence of a defect in the salary system in the government sector, according to a statement by Minister of Planning Khaled Batal Al-Najm. Committee member Jamal Cougar told (Baghdad Today) that "there is a trend by the government to legislate a new salary scale, but the circumstances that Iraq has experienced recently postponed this issue, especially after the government was transformed into a daily caretaker government." And Cougar indicated that "the legislation of the new salary scale is exclusively the prerogative of the Iraqi government, and there is no authority for the Iraqi parliament to legislate such a law." He added, "The new salary scale law can be legislated by the new government, and this new ladder will certainly address the imbalance in the salary system in the government sector and lift injustice against some categories of employees." The Minister of Planning, Khaled Battal Al-Najm, confirmed, earlier, the existence of a defect in the salary system in the government sector in the country, while noting that employees in the fifth grade down the line are below the poverty line. Al-Najm said, in a statement he followed (Baghdad Today), that “the labor force survey monitored 17% of women occupying administrative positions, which is not a small percentage,” noting that “the percentage of superficially unemployed women is high, but in details it is not high compared to the number of female researchers. work and the number of economic activists. Al-Najm pointed out the need to "reduce the differences between the advantages of government work and the advantages of the private sector," pointing out that "there is no justice in the revenues and salaries of the government sector, which represents a flaw in the salary system in Iraq." He added, "The same employees know in the ministries the same degree and qualifications, except that the salary and income of one of them is double or more than that of the other employee." He stressed that "the Economic Council discussed this matter, but it needs a political decision, perhaps for a stable government under stable social conditions," stressing that "the Iraqi salary system is unfair, and this also indicates an imbalance in the salary system." He pointed out that "some salaries in the private sector are much higher than government income if compared to capabilities and qualifications, but the prevailing social culture and lack of understanding of the Social Security Law push people, including those working in the private sector, to search for a government job." And he indicated, "The Central Statistical Organization conducted a study across statistical divisions in the governorate and districts on the employee's poverty line, which showed that employees in the fifth degree downwards are below the poverty line." He explained, "The young man must have a bachelor's degree with a seventh degree, but most workers in the private sector are of the same degree with lower qualifications, and their salary is higher," noting that "the income of the worker in the government sector is not high, but the search for security is behind the demand for the government sector." . He continued, "One of the important points for activating the private sector is the Social Security Law," noting that "the Pension Fund suffers from great pressures because it relies on the same curriculum and previous employment policies."

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Parliamentary Finance: The new salary scale is exclusively the prerogative of the government, not Parliament

Baghdad / Obelisk: The Parliamentary Finance Committee commented, Thursday, July 7, 2022, on the existence of a defect in the salary system in the government sector, according to a statement by Minister of Planning Khaled Batal Al-Najm.

Committee member Jamal Cougar said in a statement followed by the obelisk that there is a tendency by the government to legislate a new salary scale, but the circumstances that Iraq has experienced recently postponed this issue, especially after the government was transformed into a daily caretaker government.

He added that the new salary scale legislation is exclusively the prerogative of the Iraqi government, and there is no authority for the Iraqi parliament to legislate such a law.

He added the new salary scale law, can be legislated by the new government, and certainly this new ladder will address the imbalance in the salary system in the government sector and lift the injustice of some categories of employees.

The Minister of Planning, Khaled Battal Al-Najm, had confirmed earlier, that there was a defect in the salary system in the government sector in the country, and while he indicated that employees in the fifth degree down the poverty line.

He pointed out that some salaries in the private sector are much higher than government income when compared to capabilities and qualifications, but the prevailing social culture and lack of understanding of the Social Security Law push people, including those working in the private sector, to search for a government job.

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Market Review: Supplementary Budget Stabilises the Market

Ahmed-Tabaqchali-AMT-IRIS-2-resized.png

7th July 2022 in Ahmed Tabaqchali, Investment
 

By Ahmed Tabaqchali, Chief Strategist of AFC Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Supplementary Budget Stabilises the Market

The market, as measured by the Rabee Securities RSISX USD Index, was up 3.4% for the month, and up 5.1% for the year.

The last two months of profit-taking continued into the first week of June, at which point it was halted by the passage of the supplementary budget bill on June 8th. This in turn stabilised the market, whose technical picture continues to be positive, as its two-month decline has only taken it to within the middle of its two-year up-trending channel (chart below) - an uptrend that ended a brutal multi-year bear market.

 

While there is the potential for the market to resume its decline, the macroeconomic fundamentals discussed here two months ago support thesis that the two-year uptrend should continue even if the upward slope moderates somewhat.

This picture contrasts favourably with the majority of global markets, which underscores Iraq's attractive risk-reward profile and diversification benefits versus these markets, especially considering that Iraq's economy, unlike most economies worldwide, is a significant beneficiary of the current high oil price environment.

AT-070722-1.png(Source Iraq Stock Exchange, Rabee Securities, AFC Research, data as of June 30th)

Passage of the Supplementary Budget Bill

The delays in government formation, following the parliamentary elections on October 10th, meant that the current caretaker government, lacking the authority to propose a 2022 budget, was restricted to spending 1/12th of the 2021 budget on a monthly basis in 2022. While the 1/12th spending rule allowed the government to continue funding its current expenditures (salaries, pensions, social security and the provisioning of goods and services), and some of the investment spending that was initiated in 2021; it nevertheless prevented it from fulfilling its continuing investment spending requirements. Crucially the 1/12th rule prevented the government from using the bounty of higher oil prices in alleviating the harmful effects of the sharply increasing food prices on the population. The supplementary budget, in combination with the 1/12th spending rule for 2021, would in effect be in lieu of a 2022 budget. As such the total effective budget for 2022 would be about USD 92 bn, an increase of 23% above that for 2021; and made up of the 1/12th rule spending allocation of about USD 75 bn for 2022, and the supplementary budget's spending allocation of about USD 17 bn.

The supplementary budget bill, officially called the "Emergency Food Security support" bill, has its origins in demands by parliament for extra spending measures in response to public anger over the increased cost of living, and to public pressure for the government to translate the sharply rising oil revenues into public expenditures. However, the bill's passage was almost imperilled by the Federal Supreme Court (FSC) ruling, in mid-May 2022, that the government lacked the authority to present a supplementary budget bill to parliament, essentially ruling that in proposing a supplementary budget bill to parliament, it was attempting to circumvent its lack of authority to present a full budget bill. Parliament's dilemma was that although it was able to propose legislation, such legislation should not have any financial implications, which prevented it from proposing its version of the supplementary budget. However, the political class's ingenious solution was arguing that if a proposed legislation was not objected to by the government, then it can propose legislation with financial implications - which it did by legislating its own version of the supplementary budget bil, which was welcomed by the government.

 

The government has the wherewithal to fund the supplementary budget and still build a substantial budget surplus that it, or a future government, can utilise to continue pursuing expansionary budgets. Iraq's oil export sales are estimated to be at USD 117 bn for 2022, if Brent crude prices were to average USD 100 per barrel (/bbl) for the year as discussed here. Contrasting oil export sales with estimated spending for 2022 of USD 92 bn provides an idea of the expected budget surplus after accounting for the government's non-oil revenues as well. Iraq's extreme leverage to oil is manifested in the translation of every USD 1/bbl change in Brent's average price for the year, into about USD 1 bn in oil export sales, and as such in the current high oil prices environment, there is an upside to Iraq's oil export sales estimates. Given that the year-to-date average for Brent crude is about USD 106/bbl, and that Brent future contracts imply an average of USD 111/bbl for the balance of the year, then Brent crude would average USD 109/bbl in 2022 leading to about a USD 9 bn upside to Iraq's oil export revenue estimates (chart below).

However, there is also downside to Iraq's oil export revenue estimates stemming from the inhibiting effects of higher oil and food prices on the world economy, and consequently lower global demand for oil. Magnifying these growth inhibiting effects would be the almost synchronized interest rate increases by central banks worldwide to combat the inflationary effects of the higher oil and food prices. Conversely, the changing world order following the invasion of Ukraine, and the extent of and likely extended duration of the sanctions imposed on Russia, will alter the dynamics governing the relationship between world economic growth and global oil demand. In the short and medium terms, Western governments' need to lessen dependence on Russian oil, and to ensure their energy security, would mitigate the negative effects on global oil demand from weaker world economic growth. All of which should lead to sustained period of higher oil prices as argued here in "Oil and the Iraqi Economy", in which Iraq would be a major net beneficiary.

AT-070722-2.png

(Source: Iraq's Ministry of Oil, AFC Research estimates, projections are based on assumptions of average Iraqi oil price at a USD 3.5/bbl discount to Brent crude as given by future contracts in investing.com, and the unwinding of the OPEC+ deal by September 2022. Data as of June 30th)

The passage of the supplementary budget bill in June, means that most of the USD 17 bn of increased spending would be concentrated in the second half of the year, which in the process would inject sizable liquidity into the economy in a relatively short period. This in turn, should lead to a re-acceleration in the year-over-year growth in the amount of money circulating in the economy (broad money). The timing of the supplementary budget's passing came just as broad money growth is estimated to have slowed down significantly in May 2022, as the effects of the prior stimuli were exhausted after multiple months of sharp year over year increases. All of which underscore the centrality of government spending in the economy, acting as a super-efficient mechanism for transferring oil revenues into economic activities.

 

AT-070722-3.png(Source: Central Bank of Iraq, AFC Research. Actual data as of the end of April 2022, AFC Research estimates for May 2022 based on actual data for the monetary base for May 2022)

Political Stalemate or Manoeuvring

The passage of the supplementary budget bill would prolong the current impasse over government formation into the near future, contributing to the political uncertainty following the surprising results of the October 2021 parliamentary elections as discussed in "Continued Momentum".

Increasing the political uncertainty, in the second week of June, the largest parliamentary bloc, and the apparent winner of the 2021 elections - the Sadrist Movement - resigned its seats in parliament in protest over the 10-month impasse over government formation. This was seen as an opportunity for the apparent loser in the election - the Fateh Alliance - to control parliament and ultimately government formation, however emerging internal conflicts within the alliance seems to be preventing this. Nevertheless, these developments, as dramatic as they might appear to be on the surface, could be part of the continued political manoeuvring of a very tortuous government formation process. This line of reasoning is rooted in the curious timing of the resignations immediately following the passage of the supplementary budget bill, which was championed by the resigning Sadrist Movement; and its passage in parliament was assured due to the large parliamentary block it commanded, before its resignation, with its partners.

It seems that the continuation of the status-quo, despite the continued political uncertainty, would be a preferred solution for all political parties, as it would preserve the country's ethno-sectarian parties' share of the state's resources achieved in the 2018 elections. While it's unclear if the status quo would continue for a few more weeks or months, or how it would the impasse over government formation be resolved; yet it's clear that the compromise over the passage of the supplementary budget bill would keep the wheels of government spending turning, and with that the lifeblood of the economy.

Conclusion

The market's benign response to the unexpected political developments in the month, and its continued positive reaction to the passage of the supplementary budget bill, supports the argument made above. Moreover, the market's action is similar to that following the late adoption of the 2021 budget in April 2021 - which at the time led to a continuation of its rally as discussed here in April.

While the political uncertainty would continue to dampen foreign interest in Iraq's equity market until the government's formation a few months later, Iraq's value proposition is compelling as its economy is a huge beneficiary of the high crude oil price environment. And its equity market is in the very early stages of emerging from a multi-year bear market, and as such its risk-reward profile is very attractive against most global markets.

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