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Central bank lending to commercial banks came right time
21/5/2015
of the Iraqi economy suffers from a severe financial crisis caused by the deterioration of the global oil prices, the tax system, and the war against Daash the war that was supposed to cover the costs of failure of the world especially countries in the Middle East and which has become the Iraqi citizen is fighting on their behalf. After all, the cost of the war with Daash increased insult to injury on the Iraqi economy after the deterioration of oil prices in the global market to nearly 40 percent over the last year such as this month.
It was not supposed to be exposed to the Iraqi economy so shocking if Iraq was able to diversify its economy But the wrong economic policies of the previous governments have made the Iraqi economy depends more and more on oil exports, so it came that the state can not exchange what you need from Leaved pens without the export of oil. Thus the size of the Iraqi budget dropped to nearly half guesses for what became nearly $ 70 billion after it was expected to reach financial resources to the equivalent of $ 140 billion. This acute shortage in the budget reflected negatively on the financial allocations for all the state ministries, local governments, and government projects. And thus it became news lack of financial allocations for government projects on the front pages of Iraqi newspapers. We have disrupted projects on achievement while others were canceled. Some local governments declared bankruptcy and became even government employee is not reassuring on the receipt of his monthly salary on time. It is the first financial hardship in Iraq after years of global boycott.
But why and how oil exports affect the macro and micro of Iraq? The answer is that oil imports constitute about 90% of the imports of the Iraqi treasury, Therefore, any deficiency in the amount of oil exports or decrease in global oil prices will reflect negatively on the size of the Iraqi treasury. How the Iraqi economy is affected by the lack of financial imports? The national economy is affected by low government budget, which in turn impacted negatively on other economic sectors. Lack of budget means no government was able to recruit graduates and unemployed, lack of budget means that the government is unable to exchange on government projects such as highways, bridges, building hospitals, schools, dams and rehabilitation of agricultural land. Of course when it can not be a citizen to find a job, this citizen can not cover his family expenses of necessities (food, clothing) how other needs such as furniture, a car, a television, a computer, and other electrical devices and is the state of the national economy put under the name of economic recession.
the truth of the Iraqi economy is undergoing recession from two lower oil prices and convert a large part of these financial resources to military expenses to sustain the momentum of the fight against Daash. The battle cost the cost Iraq called when economists "missed opportunity" and that's when the country has to convert large blocks of human productive process (agriculture, fishing, industry, construction) to mankind just blocks fighting on the battlefronts. In other words, instead of standing champions of the armed forces and the popular crowd on the battlefronts against Daash consumers, it is possible to be productive: the farmer in his field and working in his factory, and construction at his workplace. Secondly, that the war with Daash wasted large amounts of hard currency for the purchase of military equipment that Iraq can not manufacture. When the $ 100 million the state pay for the purchase of tanks deal from the United States means that the Iraqi government must reduce internal expenses of $ 100 million. Meaning that the state can not exchange on the agricultural sector or the industrial and other sectors in the amount of $ 100 million.
What to do? There are two weapons to eliminate the economic recession is not available to the Iraqi state. The first is to reduce taxes on the citizens, but Iraq essentially no he has a political tax Thus, this option does not exist already, the second weapon is by increasing government expenditure, and as long as that most government expenditures go far on military equipment to fight the Daash, this road is the other not option is available.
There is a third way to ease the effects of economic recession which is by borrowing from countries or international banks. I have used the Saddam Hussein regime this way and succeeded to a large extent in the Iraqi economy. The Iraqi does not feel the negative effects of the war on the Iraqi market due to the financial aid and loans provided by the Gulf states, even if most of the men of Iraq Mottaghvelin on the battle fronts to protect the eastern front of the Arab nation as it was marketed his media Saddam. The use of foreign loans and reasonable discreet ways you can move the national economy, especially if the life of a short recession cycle.
on what seems to be the government of Mr. Abadi do not have the stomach to digest the foreign debt, a decision that is not a mistake (and the will of God will not hold him accountable on it) under the stage known political Baltkhasam and concern the political leadership of the war. Thus came the central bank in the financing of commercial banks in the amount trillion dinars decision at the right time. The function of this loan is to encourage commercial banks to lend to small and medium entrepreneurs citizens. This procedure is not without historical roots, where most of the central banks in civilized countries use of its funds to help the local economy in a time of economic crisis or in the time of economic recession. The last such grant is what the convergence of $ 800 billion loans (interest rate close to 0%) of the commercial banks by the US Federal Reserve Bank to help the economy out of recession. This procedure is also used by the European Central Bank. The purpose of these loans is to encourage local banks to lend to people who want, for example, buy a car, and thus increase the overall demand for goods and services, which in turn will increase the demand for hands national workforce.
Decision of the Central Bank sprayed trillion dinars for the expenses for the purpose of financing loans for projects Small and medium-sized in the interest of the Iraqi economy, because first, there is not much when the Iraqi capital investor. It is true that there are some of the citizens and families affiliated with the Alumblyonnerah but millions in their possession is not sufficient to establish a major project worth 100 or $ 150 million, the price of factories and large enterprises rate. Secondly, there is no good administration in Iraq for the management of such projects, Director Iraqi failure to achieve reasonable profits for many government projects, which was founded during the former regime under the slogan of "socialist sector." Thirdly, small and medium enterprises do not need a large capital observed a much higher success of large enterprises because they do not need sophisticated marketing methods not afraid of global competition with a little bit of government protection. Fourthly, a more importantly, that the small and medium enterprises is one of the top provides work opportunities in the country. More than 80% of the workforce in the United States working in small and medium-economic projects. This percentage will not be far from the figure in Iraq.
It remains to be known as commercial banks how to distribute these loans to beneficiaries, project type, and ensure its success. The history of the Iraqi ministries is not encouraging in terms of follow-up projects after incorporation, there is no maintenance and follow-up for most government projects offices after incorporation, but this trend included not to pursue the fate of the loans granted by the State for some citizens to establish small projects. I wish the Central Bank of Iraq establish a committee relay and it is considering loans to citizens and whether the type of money spent on those projects planned or spent on personal matters (private car BMW), what are the chances of success of these projects, and how many employees are women and men. It funds Iraq and the right of the Central Bank, the custodian of the health and growth of the national economy, to monitor.
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21/5/2015
of the Iraqi economy suffers from a severe financial crisis caused by the deterioration of the global oil prices, the tax system, and the war against Daash the war that was supposed to cover the costs of failure of the world especially countries in the Middle East and which has become the Iraqi citizen is fighting on their behalf. After all, the cost of the war with Daash increased insult to injury on the Iraqi economy after the deterioration of oil prices in the global market to nearly 40 percent over the last year such as this month.
It was not supposed to be exposed to the Iraqi economy so shocking if Iraq was able to diversify its economy But the wrong economic policies of the previous governments have made the Iraqi economy depends more and more on oil exports, so it came that the state can not exchange what you need from Leaved pens without the export of oil. Thus the size of the Iraqi budget dropped to nearly half guesses for what became nearly $ 70 billion after it was expected to reach financial resources to the equivalent of $ 140 billion. This acute shortage in the budget reflected negatively on the financial allocations for all the state ministries, local governments, and government projects. And thus it became news lack of financial allocations for government projects on the front pages of Iraqi newspapers. We have disrupted projects on achievement while others were canceled. Some local governments declared bankruptcy and became even government employee is not reassuring on the receipt of his monthly salary on time. It is the first financial hardship in Iraq after years of global boycott.
But why and how oil exports affect the macro and micro of Iraq? The answer is that oil imports constitute about 90% of the imports of the Iraqi treasury, Therefore, any deficiency in the amount of oil exports or decrease in global oil prices will reflect negatively on the size of the Iraqi treasury. How the Iraqi economy is affected by the lack of financial imports? The national economy is affected by low government budget, which in turn impacted negatively on other economic sectors. Lack of budget means no government was able to recruit graduates and unemployed, lack of budget means that the government is unable to exchange on government projects such as highways, bridges, building hospitals, schools, dams and rehabilitation of agricultural land. Of course when it can not be a citizen to find a job, this citizen can not cover his family expenses of necessities (food, clothing) how other needs such as furniture, a car, a television, a computer, and other electrical devices and is the state of the national economy put under the name of economic recession.
the truth of the Iraqi economy is undergoing recession from two lower oil prices and convert a large part of these financial resources to military expenses to sustain the momentum of the fight against Daash. The battle cost the cost Iraq called when economists "missed opportunity" and that's when the country has to convert large blocks of human productive process (agriculture, fishing, industry, construction) to mankind just blocks fighting on the battlefronts. In other words, instead of standing champions of the armed forces and the popular crowd on the battlefronts against Daash consumers, it is possible to be productive: the farmer in his field and working in his factory, and construction at his workplace. Secondly, that the war with Daash wasted large amounts of hard currency for the purchase of military equipment that Iraq can not manufacture. When the $ 100 million the state pay for the purchase of tanks deal from the United States means that the Iraqi government must reduce internal expenses of $ 100 million. Meaning that the state can not exchange on the agricultural sector or the industrial and other sectors in the amount of $ 100 million.
What to do? There are two weapons to eliminate the economic recession is not available to the Iraqi state. The first is to reduce taxes on the citizens, but Iraq essentially no he has a political tax Thus, this option does not exist already, the second weapon is by increasing government expenditure, and as long as that most government expenditures go far on military equipment to fight the Daash, this road is the other not option is available.
There is a third way to ease the effects of economic recession which is by borrowing from countries or international banks. I have used the Saddam Hussein regime this way and succeeded to a large extent in the Iraqi economy. The Iraqi does not feel the negative effects of the war on the Iraqi market due to the financial aid and loans provided by the Gulf states, even if most of the men of Iraq Mottaghvelin on the battle fronts to protect the eastern front of the Arab nation as it was marketed his media Saddam. The use of foreign loans and reasonable discreet ways you can move the national economy, especially if the life of a short recession cycle.
on what seems to be the government of Mr. Abadi do not have the stomach to digest the foreign debt, a decision that is not a mistake (and the will of God will not hold him accountable on it) under the stage known political Baltkhasam and concern the political leadership of the war. Thus came the central bank in the financing of commercial banks in the amount trillion dinars decision at the right time. The function of this loan is to encourage commercial banks to lend to small and medium entrepreneurs citizens. This procedure is not without historical roots, where most of the central banks in civilized countries use of its funds to help the local economy in a time of economic crisis or in the time of economic recession. The last such grant is what the convergence of $ 800 billion loans (interest rate close to 0%) of the commercial banks by the US Federal Reserve Bank to help the economy out of recession. This procedure is also used by the European Central Bank. The purpose of these loans is to encourage local banks to lend to people who want, for example, buy a car, and thus increase the overall demand for goods and services, which in turn will increase the demand for hands national workforce.
Decision of the Central Bank sprayed trillion dinars for the expenses for the purpose of financing loans for projects Small and medium-sized in the interest of the Iraqi economy, because first, there is not much when the Iraqi capital investor. It is true that there are some of the citizens and families affiliated with the Alumblyonnerah but millions in their possession is not sufficient to establish a major project worth 100 or $ 150 million, the price of factories and large enterprises rate. Secondly, there is no good administration in Iraq for the management of such projects, Director Iraqi failure to achieve reasonable profits for many government projects, which was founded during the former regime under the slogan of "socialist sector." Thirdly, small and medium enterprises do not need a large capital observed a much higher success of large enterprises because they do not need sophisticated marketing methods not afraid of global competition with a little bit of government protection. Fourthly, a more importantly, that the small and medium enterprises is one of the top provides work opportunities in the country. More than 80% of the workforce in the United States working in small and medium-economic projects. This percentage will not be far from the figure in Iraq.
It remains to be known as commercial banks how to distribute these loans to beneficiaries, project type, and ensure its success. The history of the Iraqi ministries is not encouraging in terms of follow-up projects after incorporation, there is no maintenance and follow-up for most government projects offices after incorporation, but this trend included not to pursue the fate of the loans granted by the State for some citizens to establish small projects. I wish the Central Bank of Iraq establish a committee relay and it is considering loans to citizens and whether the type of money spent on those projects planned or spent on personal matters (private car BMW), what are the chances of success of these projects, and how many employees are women and men. It funds Iraq and the right of the Central Bank, the custodian of the health and growth of the national economy, to monitor.
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