World Bank: Iraq on the verge of huge changes

[proteus]

World Bank: Iraq on the verge of huge changes in the financial sector and government

Posted: July 3, 2011 by THE CURRENCY NEWSHOUND

Sunday – July 3 (July) 2011

The success of reconstruction depends on smart economic policy and regulatory reforms

In a country emerging from conflict comes its oil sector, including more than 90% of state revenues, but does not occupy more than 1% of the workforce, the success of reconstruction depends on the economic policy smart, as does the World Bank to meet one of its senior officials with Iraq’s report oil.

The report said the World Bank is one of several international organizations pushing Iraq to open its private sector to foreign investment. According to what he sees Stephen Rimmer, a specialist private sector development in the bank, one of the keys to success is the establishment of competitive markets.

And lead the Iraqi government a large role in the operation of the economy; and one of the results, as the survey was conducted recently to gauge the ease of doing business in the countries of the world, that Iraq was ranked 20 before the end of the list.

In an interview with “Report of the Iraq oil,” Reimer discussed the various initiatives the World Bank designed to help Iraq move toward economic growth, including large-scale survey was conducted on the business sector in the country, and the report will be published soon, outlines the reforms recommended made.

Unique “world” to provide the text of the meeting, which was conducted by the head of Iraq’s oil report Ben Landau, with Stephen Rimmer.

Ben Landau: In a time when large companies come to Iraq, you need these companies to put their money somewhere, perhaps to ensure the financing of projects. What is the status of the banking sector and the reforms that the World Bank hopes to conduct?

Stephen Rimmer: improve the capacity of the financial sector in Iraq is a key priority at the World Bank and other development partners such as USAID. As you mentioned at the outset, it is important for Iraq’s possession of a financial sector that works well for some companies in support of its financial transactions and to provide capital to the private sector for expansion, and operation of labor.

The World Bank has a massive program to support the financial sector including the reform of banks, Iraqi government presidents, who are currently working almost Ahtkariyn. The aim of this support is to help transform these banks to big banks are working on a commercial basis so that they can compete in a competitive market. The reforms also aim to obtain a better perception of the financial situation of the two major government banks.

Also, the World Bank and the IFC is launching a program of $ 30 million to finance small projects in Iraq will support small businesses and financiers to support regulatory reform and capacity building of the Iraqi Central Bank. This support will provide over time a strong base for the financial sector in the area supplied capital for private companies, including SMEs.

Q. For.: How is this done? Do you lack the reserves to banks to provide funds for local and foreign investors?

A.: There are a number of private banks, there are also logged on is new to the financial sector in Iraq, such Stapennek and HSBC, there are private banks it comes to Iraq. And on the banks of deposit much of their capital in the Central Bank so it does not remain under her head a lot of money, capital, which must be available to them when you want to lend money to companies larger and more stable.

Q. For.: Is it normal to oblige banks to come to Iraq very large deposit of funds with the Central Bank?

A. T.: Different rates of insufficient funds and deposit requirements for different countries, but the percentage is high in Iraq, unusually, as well as a system administrator in Iraq, restrict the operation of private banks.

Q. For.: In practical terms, what that means for banks and for the people who want to benefit from these banks?

A.: Means that the banks do not have enough funds to lend, and also means that there is high risk, as well as other factors such as the security situation. And banks are generally risk averse when it comes to lending.

Q.: What is the reason why the central bank wants the money?

A.: Mainly a matter of precaution in the financial sector to ensure a sufficient deposit with the Central Bank. The aim to encourage good behavior through financial institutions and risk reduction.

Q.: If you work in oil companies, whether large international oil company operating in the Iraqi fields, or Drilling company or services, how they interact with the banking sector in Iraq, whether banks, Iraqi government or foreign? Look at the long term, what you need from the banking sector?

A.: Perhaps it is better to ask the companies instead of sending them off to the bank. It is clear that all companies including the oil sector companies need the ability to conduct financial transactions, receiving funds and keep the money and the distribution of funds to contractors and other customers. These needs should be in a safe place to conduct transactions and keeping deposits and large transactions. And a lot of foreign companies that decide to come to Iraq will have the capital obtained from financial institutions outside of Iraq, but will need to make financial transactions within it. Hence the importance of the financial sector in Iraq.

The financial sector still requires a lot of repair work around well; a lot of institutional and regulatory reforms as well. Banks operating in the present time, but not nearly good, as are neighboring countries.

Q. For.: Is there a problem with the independence of the financial sector, from politics?

A.: In the area of ​​corporate governance, banks are the main state-owned government-owned is the subject of a broad reform program includes state-owned enterprises announced by the Iraqi government and currently under study. This includes the reform program to convert each state-owned enterprises into commercial companies. This will include some corporate governance reforms over time, improve the governance of all companies that are seized with state institutions, and will include state-owned enterprises operating in the financial sector.

Q: The World Bank is now an assessment of the investment climate in Iraq. What is the situation?

A: Rating in progress at the present time; and includes a survey of about a thousand companies in 10 Iraqi provinces, and going on about two thirds of the questions on the characteristics of the business, within the survey was designed to be the official representative of the companies operating in Iraq. There are also some questions that ask for the views of companies.

The idea is that this is the assessment survey the first of its kind for the investment climate in Iraq and intended to get a sense the best of the private sector there: the properties of the private sector, how to run businesses and how it works, what the main problems, what major challenges, what opportunities you see companies in the spectrum of a wide range of different sectors? An evaluation of investment opportunities in neighboring countries, so this study will allow us to make comparison between companies’ work environment in Iraq and compare this working environment in the countries of the region. It will be a rich source of information for the first time give us a picture of what happens in the private sector in Iraq.

Q: How will this information helpful?

A: Government of Iraq will allow the prioritization of the reform of the private sector about the best, and determine the required reforms, the most important and urgent. Will provide policy advice based on evidence about wider. So will help in identifying the most important problems and priorities and urgent reform.

Q: How can you clarify the interaction between the government and the business sector in all areas? What is the impact of government on the foreign business and the Iraqi state-owned and private, and whether this influence is bad or good?

A: The private sector in Iraq is the work of the official record and organize the rules and regulations. There is also the informal sector is very wide, where not recorded when companies typically small. And one of the biggest challenges as mentioned Doing Business on the World Bank, a report assessing the organization of international business, is that Iraq is ranked 166 of total 183 countries. Therefore, Iraq is now in the last 20 countries in the field of organization of work. Regulatory environment makes it very difficult for companies to operate, and the start of business and one of the major problems in Iraq in this area.

Q: Starting business? Never mean access to capital?

A: Starting work includes the formal registration of companies on the basis of government regulations concerning the organization of work.

Q: The government says, “We look forward to the coming of foreign investors”, but it is currently difficult in the opening of the country.

A: The process to register a company is complex and time-consuming, and of course you have a wide range of transactions and regulatory approvals that you conduct; access to credit and property registration and related licenses, etc.. All of these regulatory areas in need of review and reform. We know from the report of the establishment of the World Bank’s business conditions in Iraq, the regulatory environment for the private sector.

The World Bank will soon be to the Government of Iraq, “Memorandum of reform the administration of the business” that we set, which sets out the proposed reforms in the 10 regions are where the work covered by the report. Will identify this report in the near term and medium term, reforms to improve the conditions the judge for companies to conduct business.

Q: World Bank, among other organizations, governments, etc., urges Iraq to modernize and put the investment. And how to open Iraq’s investment does not become a banana republic, this situation sometimes occurs when it comes to foreign investors to developing countries? Iraqis how to avoid a situation where they owe to foreigners, rather than to be debtors to the state-owned companies? How Iraq can maintain a level of ownership of things in the economy?

A: The challenge of President of Iraq in the private sector, is to generate jobs for the growing labor force. The oil sector employs around 1 percent of the labor force only, so it is very important to encourage private businesses to generate jobs for the vast majority of Iraqis who want to work. This represents a challenge basis, an objective basis.

As you pointed out, the challenges faced by many businesses in Iraq, including the absence of reliable basic services, infrastructure, security and regulatory environment. These are all core areas should focus on to improve the business environment to enable the private sector, starting already. There is therefore an important goal of development partners with Iraq, such as the World Bank, is to assist the Government of Iraq on the development of healthy markets, as there will be a healthy competition. This includes the reform of 180 enterprises owned by the state, currently operates more than 630 thousand people, and this special program formulated to transform state-owned enterprises into companies competitive, can work in competitive markets, and it’s President for the diversification of the private sector, who is the people and develop the wealth of the country.

Oil is the main source of government revenue, but that revenue will not be enough for Iraq to generate high living standards, and this is another reason to push forward the private sector; because the dependence on oil alone does not make Iraq prosperous.

Q: Should there be a balance between foreign investors and the level of control of Iraq to control its economy? Companies come to Iraq is a good thing; it will have more imports and the diversity of oil. But if the foreign OWN in the first place and run companies, then the Iraqis will become secondary players in the economy.

A: If you are successful in establishing a healthy and competitive markets, this will result in an increase in business, and increased investment. Some of this increase in investment would come from within Iraq, and some of the international companies. Both of which can thrive in conditions of real competition.

Can foreign companies that come with capital and experience, and this is very important because one of things the foundation for Iraq to become a prosperous, is to improve productivity in the country, and one way to achieve this is to bring experts, senior engineers, and technicians to run the companies and state-owned enterprises, some more effective and efficient.

There is plenty of room in Iraq for foreign and domestic investors alike, and both have an important role to play in Iraq’s reconstruction and development.

Q: Is there an over-reliance on the oil sector in the economy of this country?

A: This is the challenge for the president of Iraq, meaning the use of oil revenues to rebuild the country, and provide a basis for the establishment of private sector operations to a diverse, healthy and strong.

Q: What proven ways to achieve this, ie what the best practices to benefit from oil revenues?

A: Worst case scenario is the use of oil revenues for the operation of government officials, and do not have the private sector, and this scenario on Iraq be avoided. The best scenario is to use the funds wisely and expertise to develop the core infrastructure required to support the private sector, and stable electricity, and sewage systems, the fundamental and basic services. It is also important to use the funds to establish a systematic management, employing qualified personnel are eligible are able to run regular institutions efficiently and effectively.

Q: There is nothing we have seen in the past few weeks is the escalation of violence. How does the security situation in the companies, the economy, foreign investment in Iraq?

A: From the perspective of the private sector, is the security situation in Iraq, one of the factors that require consideration. On the positive side, there are parts of Iraq where the security situation is relatively good, and the Kurdistan region is one example of this. And down to Basra, there is still a lot of economic activity to support the oil and energy. Security factor deter investors, but many investors took the decision to invest in Iraq, anyway.

Investment is growing in Iraq, not only in the oil sector, but also in tourism, real estate, etc.. Is positive on a large scale. The situation is moving in the right direction. I think that everyone want to move around faster than it is now.

http://wp.me/pZC7o-91B

[estephan]

Thanks for this post Proteus , Seems like a long time since we heard from the World Bank on our investment

[easyrider]

HUGE is an understatement to what is about to take place. This is a complete global reset as far as banking goes Iraq is the country to BE. Just watch and see.

Edited July 4, 2011 by easyrider

[Aqua Dude]

this is not posted on the worldbank website....might be fake

http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,pagePK:34382~piPK:34439~theSitePK:4607,00.html

^^^^ copy and paste entire url into address bar

Edited July 4, 2011 by Aqua Dude

[drox]

Great find! This should be pinned at the top and is a must read!

This tells you all of the basic things that need to take place to support a future increase to the exchange rate. You must build the foundation first before the house. I wish in this case it was the other way around. I truly do.

[estephan]

this is not posted on the worldbank website....might be fake

http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,pagePK:34382~piPK:34439~theSitePK:4607,00.html

^^^^ copy and paste entire url into address bar

Say it ain't so Joe!

[scrillagurl]

this is not posted on the worldbank website....might be fake

http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,pagePK:34382~piPK:34439~theSitePK:4607,00.html

^^^^ copy and paste entire url into address bar

I couldn't find this either......ugh

[number9]

LOL estephan....

[TexasGranny]

Here is the original report but unless you have a subscription you can only read the intro.

My link

Q&A: The World Bank's Stephen Rimmer

The private sector development specialist recommends reforms for Iraq to open its markets to foreign and Iraqi private investment.

Construction workers restore the Victory Arch, a Saddam Hussein-era monument. Iraq's economy, which was devastated by decades of war and sanctions, is largely controlled by the state; international organizations like the World Bank are pushing Iraq to grow its private sector. (BEN VAN HEUVELEN/Iraq Oil Report)

By Ben Lando of Iraq Oil Report

Published June 30, 2011

In a post-conflict country whose oil sector generates over 90 percent of state revenue but employs less than one percent of the workforce, successful reconstruction depends on smart economic policy.

The World Bank is one of several international organization pushing Iraq to open up its private sector to foreign investment. According to Stephen Rimmer, a senior private sector development specialist at the bank, one key to success is the creation of competitive markets.

Iraq's government pl...

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Best I could do since I do not have a subscription.