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{NOTE - these are excerpts from a very long, very informative article - these excerpts relate to foreign exchange reserves, regional banks, private banks and defensible currency exchange rate.}
https://akhbaar.org/home/2022/6/295283.html
Interview of the delegate of the Iraq Oil Report magazine with the Minister of Oil, d. Ali Allawi
Saturday 25 June 2022 - 17:02
Majed Allawi
...
Allawi said the recent increase in foreign exchange reserves to $70 billion is largely due to the
rise in global oil prices, but also due to
prudent financial management and the
devaluation of the Iraqi dinar against the US dollar.
Depositors have also shown greater confidence in the Iraqi banking system as individuals and businesses have chosen to keep their money in the country rather than in other regional centers, where inflation and risks are higher.
...
Lizzie Porter: You and Prime Minister Al-Kadhimi have been talking about significant increases in foreign exchange reserves.
To what extent can this government claim to be responsible for the improved health of the economy and for those [reserves]?
Does the improvement in foreign exchange reserves reflect a real improvement in the health of the economy?
Or is it a reflection of the government's near-total dependence on crude oil sales?
Ali Allawi: Obviously, the bulk of this improvement is due to the fact that oil prices have gone up.
But on the other hand, our imports are controlled, and this means that local production has increased.
Our controls on financial expenditures are much stricter now than they were before.
We borrowed much less.
So there is an element of financial management contributing to this improvement as well - not just higher oil prices.
And I think oil prices have gone up, yeah, but they've only really gone up in terms of the financial records - because we got them three months later - maybe in March.
And before that, I mean, towards the end of 2021, when [the price of a barrel of oil] crossed the $70 threshold, our diet was high, but diet in terms of controlled expenditures; If you really looked at the pressure on us in the budget, we could have spent all that money easily.
...
Ali Allawi: Spending [was] under control last year - I mean, we controlled expenditures so much that the actual deficit was about one-fifth of the planned deficit.
The planned deficit was more than 30 trillion dinars, and the actual deficit was seven.
We did not rely on printing money.
We had a very successful local bond issuance with very attractive interest rates, so it sucked a lot of money.
We have seen an increase in the amount of foreign currency deposits in our banking system, which is already a huge increase, an increase of 30%. yes.
So all of these things, these numbers speak for themselves.
The fact that oil prices are high has made our financial lives much easier.
At the same time, [there is] the fact that investment levels have increased - the amount of money coming in for industrial finance and from foreign investors is actually very high - small and medium-sized enterprises.
Talk to the IFC, and they'll tell you.
So, there are some capital inflows.
Also, the capital inflows came partly as a result of the exchange adjustments, and partly as a result of the difficulties in the financial markets of neighboring countries, especially Turkey and Lebanon.
So when you meditate, putting your money here is not a bad idea.
Lizzie Porter: So people moved money from Turkey and Lebanon to Iraq?
Ali Allawi: Yes. Part of that is reflected in the foreign exchange reserves figures.
Lizzie Porter: Those in Lebanon who can get their money out of Lebanon.
Ali Allawi: And Turkey too - there are a lot of Iraqi dollars in Turkey and people were afraid.
Lizzie Porter: So companies and individuals are returning the money they had in Turkish banks to Iraqi banks?
Ali Allawi: Yes. I mean, it's remarkable. We don't have the numbers to estimate, but they are noticeable.
...
Lizzie Porter: I have some additional questions about banking.
I have talked about this increase in private bank deposits.
Why is that?
Why do individuals feel relatively suddenly more confident in the banking sector in Iraq?
Ali Allawi: Well, I mean, in terms of government banks, they feel confident in the government - and that the government is wisely managing the [environment] of the macro economy.
I don't think people think this way in a lot of vocabulary, but they see a stable environment.
They see a defensible currency now at 1,450 [dinars per US dollar].
The benefits of devaluation are starting to appear through increased investment flows.
And I think there is a general sense that the macroeconomic environment is stable.
Now, some of the more professional private banks - and there are some of them - have, I think, a very good track record of attracting deposits from people who have kept their money at home before.
Some banks and their subsidiaries, especially regional banks, have had an exceptional year this year.
And more and more people realize that with the loss of profitable opportunities in the foreign exchange market, they as banks must work together, and they are taking it seriously.
...
Lizzie Porter: I have some additional questions about the reform.
Since you released the white paper, it is clear that oil prices have skyrocketed. In light of this, is there a political will on the part of parliamentarians and senior ministry officials to carry out reforms?
Ali Allawi: I think so. People always ask this question, that [the white paper] is dead - it's not.
There is a suitable structure instead. And the repair cell is working. They hold regular meetings to oversee and direct the reform process.
Ministries are responding. Some respond faster than others. But they all respond.
People don't take this as just another document that will be put on the shelf and get dusty.
...
{complete article is at https://akhbaar.org/home/2022/6/295283.html}
https://akhbaar.org/home/2022/6/295283.html
Interview of the delegate of the Iraq Oil Report magazine with the Minister of Oil, d. Ali Allawi
Saturday 25 June 2022 - 17:02
Majed Allawi
...
Allawi said the recent increase in foreign exchange reserves to $70 billion is largely due to the
rise in global oil prices, but also due to
prudent financial management and the
devaluation of the Iraqi dinar against the US dollar.
Depositors have also shown greater confidence in the Iraqi banking system as individuals and businesses have chosen to keep their money in the country rather than in other regional centers, where inflation and risks are higher.
...
Lizzie Porter: You and Prime Minister Al-Kadhimi have been talking about significant increases in foreign exchange reserves.
To what extent can this government claim to be responsible for the improved health of the economy and for those [reserves]?
Does the improvement in foreign exchange reserves reflect a real improvement in the health of the economy?
Or is it a reflection of the government's near-total dependence on crude oil sales?
Ali Allawi: Obviously, the bulk of this improvement is due to the fact that oil prices have gone up.
But on the other hand, our imports are controlled, and this means that local production has increased.
Our controls on financial expenditures are much stricter now than they were before.
We borrowed much less.
So there is an element of financial management contributing to this improvement as well - not just higher oil prices.
And I think oil prices have gone up, yeah, but they've only really gone up in terms of the financial records - because we got them three months later - maybe in March.
And before that, I mean, towards the end of 2021, when [the price of a barrel of oil] crossed the $70 threshold, our diet was high, but diet in terms of controlled expenditures; If you really looked at the pressure on us in the budget, we could have spent all that money easily.
...
Ali Allawi: Spending [was] under control last year - I mean, we controlled expenditures so much that the actual deficit was about one-fifth of the planned deficit.
The planned deficit was more than 30 trillion dinars, and the actual deficit was seven.
We did not rely on printing money.
We had a very successful local bond issuance with very attractive interest rates, so it sucked a lot of money.
We have seen an increase in the amount of foreign currency deposits in our banking system, which is already a huge increase, an increase of 30%. yes.
So all of these things, these numbers speak for themselves.
The fact that oil prices are high has made our financial lives much easier.
At the same time, [there is] the fact that investment levels have increased - the amount of money coming in for industrial finance and from foreign investors is actually very high - small and medium-sized enterprises.
Talk to the IFC, and they'll tell you.
So, there are some capital inflows.
Also, the capital inflows came partly as a result of the exchange adjustments, and partly as a result of the difficulties in the financial markets of neighboring countries, especially Turkey and Lebanon.
So when you meditate, putting your money here is not a bad idea.
Lizzie Porter: So people moved money from Turkey and Lebanon to Iraq?
Ali Allawi: Yes. Part of that is reflected in the foreign exchange reserves figures.
Lizzie Porter: Those in Lebanon who can get their money out of Lebanon.
Ali Allawi: And Turkey too - there are a lot of Iraqi dollars in Turkey and people were afraid.
Lizzie Porter: So companies and individuals are returning the money they had in Turkish banks to Iraqi banks?
Ali Allawi: Yes. I mean, it's remarkable. We don't have the numbers to estimate, but they are noticeable.
...
Lizzie Porter: I have some additional questions about banking.
I have talked about this increase in private bank deposits.
Why is that?
Why do individuals feel relatively suddenly more confident in the banking sector in Iraq?
Ali Allawi: Well, I mean, in terms of government banks, they feel confident in the government - and that the government is wisely managing the [environment] of the macro economy.
I don't think people think this way in a lot of vocabulary, but they see a stable environment.
They see a defensible currency now at 1,450 [dinars per US dollar].
The benefits of devaluation are starting to appear through increased investment flows.
And I think there is a general sense that the macroeconomic environment is stable.
Now, some of the more professional private banks - and there are some of them - have, I think, a very good track record of attracting deposits from people who have kept their money at home before.
Some banks and their subsidiaries, especially regional banks, have had an exceptional year this year.
And more and more people realize that with the loss of profitable opportunities in the foreign exchange market, they as banks must work together, and they are taking it seriously.
...
Lizzie Porter: I have some additional questions about the reform.
Since you released the white paper, it is clear that oil prices have skyrocketed. In light of this, is there a political will on the part of parliamentarians and senior ministry officials to carry out reforms?
Ali Allawi: I think so. People always ask this question, that [the white paper] is dead - it's not.
There is a suitable structure instead. And the repair cell is working. They hold regular meetings to oversee and direct the reform process.
Ministries are responding. Some respond faster than others. But they all respond.
People don't take this as just another document that will be put on the shelf and get dusty.
...
{complete article is at https://akhbaar.org/home/2022/6/295283.html}
