Shredd: This is a great article folks. When you see in the dinar world all the talk about "bringing investment into Iraq" and how important it is, this article is speaking of this.
The issuance of bonds is lending. Not lending to citizens tho. Lending to municipalities for infrastructure....schools, roads, community services, etc. Corporate bonds are also a part of this.
Lending to corporations for expansion.
Bonds by nature are low risk for the most part since they have fixed rates. BUT, bonds can be horrible investments if the market is or could be fluctuating substantially. What does this tell us? Well it tells us that there is confidence in the investment and repayment of these bonds.
Let me give you an example. Let's say you and I invested in a bond that promised to pay us a fixed rate of 3%. Our friend invested in an asset-backed security at a floating rate (e.g., 1mLibor+1.5%).
Now, if the market interest rates are in substantial flux, positively or negatively, we are going to fare differently than our friend. If the rates fall, you and I are safe but the issuer of the bond may be at risk for defaulting on paying us. If the market rates dramatically increase, you and I could be missing out on greater returns.
Ok, sorry for the details but this "investment coming to Iraq" via bonds shows us confidence in the Stability of the market. This is a delicate balance.
I know this first hand, having been in the midst of managing several massive funds when the market suffered in the fall of 2008.
This also shows us plans for infrastructure growth and investment interest. I'm not going to invest in a municipal bond if I'm afraid the city is going to be bombed, right?!
Good article timmy...thanks for posting! LINK FULL ARTICLE:
During the brainstorming seminar organized by the Ministry with the participation of leading economists in Iraq .. and Planning Minister:
We search for new ideas to overcome the crisis and the establishment of new policies for the next stage make us safe from volatility in oil prices
Websites 15 January, 2015
In the first step taken by the Ministry of Planning in its quest to find practical solutions to the economic crisis faced by Iraq as a result of the decline in oil prices by about sharp .. the ministry has organized an extensive seminar chaired by the Minister of Planning,
Dr. Salman Jumaili allocated to discuss the performance of the Iraqi economy under the current circumstances and how to get out of the current crisis, and was attended by some of the members of the House of Representatives and the Director of the Office of the Prime Minister and a number of consultants, experts and representatives of the private sector and the heads of professional organizations concerned with economic affairs and representatives of the banking sector
Saw ask a lot of important insights and ideas in addressing the crisis and the search for suitable avoid fluctuations of the Iraqi economy and the problems caused by the drop in oil prices and policy solutions
At the beginning of the seminar, Mr. Minister of Planning Dr Salman Jumaili occur .. that Iraq today is an urgent need to take advantage of specialized views of the economy to cross in and out of this economic crisis ..
And everyone knows the size of this crisis and what Angkasadtha the country from economic, political and social terms, and therefore, this symposium do not include a specific focus but is a seminar for brainstorming ideas which we can move beyond this crisis,
pointing out that "we do not need to indulge in the characterization and preparation of studies and large headlines Ntdolha always whether to activate the private sector and rural, industrial and other development ..
calling to go towards research for solutions in the major joints and what needs to be achieved both in the banking sector and what are the obstacles that prevent this sector is playing its role .. or the private sector and what are the obstacles and how to address them, whether in the legislative arena and to issue laws or modification of government policies ..
The minister went on to say "we have to look for new ideas in order to overcome the crisis and establishment of new policies begin with a new stage make us safe from volatility in oil prices, which has made the country is facing a crisis ..
He pointed out that the obligations of the implementation of investment projects and the program of regional development, as well as commitments Fixed in the ongoing wage and salaries and other expenses budget the government may be required to issue a total budget able to accommodate these requirements, but that it will increase the deficit in this budget size.
And between Mr. Minister: that address the fiscal deficit in the general budget solutions were always come at the expense of investment spending and to stop the implementation of a number of projects or non-acceptance of new projects,
a mildly them from the economic point of view measures it improper actions lead to further deterioration and deepening problem Economic large decline in growth rates, which Mizbb widespread unemployment problem, and then forced the state to absorb the unemployed in the state departments Miada to a new wave of surplus labor, which is a burden and a commitment to a new state budget
From his part, Mr. Director-General for Economic and Financial Policy Department of the Ministry of Planning Dr Aladdin Jafar and the reality of the Iraqi economy ..mbana: that the Iraqi economy has achieved in recent years, an important development in many economic indicators and variables as GDP recorded in 2012 and current prices rise an increase of up to (16%) of up to 252 trillion dinars (217) trillion dinars for 2011.
The gross domestic product rose in real terms to 70 billion dinars in 2012 compared to 64 billion dinars in 2011, registering an a rise of 10.4%.
The improvement in GDP growth to a number of factors, including: the high amount of crude oil production at a rate (11%) between 2011.2012, as well as the high price of a barrel of crude oil to 107 dollars in 2012 after it was (103) a barrel in 2011 dollars and an increase of 3.8%.
This Mieks the close relationship between the price of oil worldwide and achieved growth rates in the Iraqi economy
He Jaafar said that despite these positive developments are still the Iraqi economy is facing many problems and economic and social challenges is poor role of the private sector in the development process .. and rents the Iraqi economy and its dependence on oil as the sole source of revenue .. as well as weak productivity and lack of flexibility of the production machinery ..
The declining role of the banking system to meet the requirements of development .. accompanied by a continuous rise in the volume of operating expenses at the expense of investment expenditure ..
and the increase continued in the size of the population and high poverty rate .. with no educational system's ability to keep up with modern developments and to meet the development of the human elements trained needs .. and the spread of the phenomenon of financial and administrative corruption.
As part of the solutions available between Jaafar .. to there are many measures that the government can do to reduce the deficit, including: resort to issuing lending bonds instead of letters of guarantee and is selling these bonds to citizens at fixed prices,
according to the type of each transaction as buying a car, real estate or other, and this measure would provide large amounts contribute to filling the part of the deficit .. either with regard to taxes and fees - confirms Jaafar:
The large area in front of Iraq to take advantage of this tool in promoting financial state revenue through the activation of a number of procedures for the fees of customs and provide services in accordance with the mechanism market and the principle of cost recovery service and charging for the use of highways and other government facilities ..
pointing out that all these measures are limited impact unless it is activating the real sectors of the economy and create an effective environment for investment and business generating income and wealth
He said Jaafar said the meeting point between fiscal and monetary policies are working to re-plan the banking and credit of the total short-term loans and credit provided by the banking system as a whole to the beneficiaries to finance various types of investment and other activities in various economic sectors in which a flexible plan.
Be adjusted as necessary requirements which the represent the confluence of the focal point between the three sides are responsible for economic policies, namely the Ministry of Planning as responsible for the investment activities and Ministry of Finance as responsible for the operational activities of the Central Bank as well,
knowing that the work of such a plan does not represent any restriction or financial curb Services banking or any form of central bank intervention work on the contrary, that the bank credit plan will help to allocate credit resources optimally between the various economic sectors and in line with supply and demand mechanisms while providing the flexibility and capability to respond to government decisions during emergency situations.
He stressed Jaafar on the need for a clear philosophy for the management of the Iraqi economy works in the framework of the banking system may not be the banks divided into a special section of my family and the last government, including Macserv by the Ministry of Finance and the other under the supervision of the central bank and there must be treated equally with all the banks in accordance with the unified financial and economic criteria. ..
calling for private banks to support and allow them to do all that banking operations would government banks .. and to encourage and facilitate the integration of the banks process and the formation of a large venture capital financial institutions are able to meet all the requirements of development,
including public and private investment projects financing ... as well as encouraging the establishment of foreign bank or financial entity owned by them .. fully and provide all necessary steps to open branches of foreign banks in Iraq, the facilities ... and the pursuit of the reduction of the process of granting interest-free loans by government banks, who seemed clearly the position of other banks.
See Jafar: that the current circumstances in the state budget and its impact on the implementation of investment projects may require a re-think to ask the implementation of infrastructure basic projects in accordance with the principle of ((payment on credit)) is a chance the local and foreign private sector to participate in the bear part of the burden the investment of the State, especially since Iraq has sufficient guarantees to meet future obligations.
Also, the options open to encourage foreign investment to contribute to the development of economic zones in different forms and that is deployed to the provinces, according to comparative advantage of each of them as the Iraq qualified to be home "for many of the industries that have a market" in vogue, whether inside Iraq or in the neighboring regional countries.
In order to activate and develop the private sector .. Dr. Aladdin Jafar that the presence of an appropriate legislative framework allows the private sector to participate in the financing of the general budget projects may provide the appropriate opportunity to support this sector on the one hand and reduce the government burden on the other hand,
especially in the physical-yield projects that revenues financial After completion, including the water and oil refineries, electric power and other desalination projects so as to ensure that the proportion of this income to shareholders in the financing of private sector partners, provided that remained ownership and management of these projects, however, the public sector. This may be available through the issuance of special projects to be agreed upon bonds.
To the Director General of the Economic Department at the Ministry of Finance, Mr. Khaled Salah al-Din appeared optimistic when pointed out that Iraq could get out of this crisis, if it has been invested about true .. Indicating that address this problem can be through the issuance of bonds and to address the structural imbalance in salaries and wages,
which led to an imbalance in the labor market by having exaggerated the provisions .. calling to raise the risk allocation of salaries of some ministries and departments .. He also called for the imposition of taxes on colleges
Salahuddin called to the necessity of activating the role of private banks and the reduction of loans granted without benefits.
The economic expert Bassem Jamil Anton, Vice President of the Iraqi Economists Association has pointed out in his speech to: that the private sector bears the burden of 50 percent of the labor force with no guarantees for workers in it as well as the absence of the industry ..
calling to go about restructuring and privatization of many services in order to bring reverse migration from the public sector to the private sector, there are more than 25 industrial area surrounding the capital Baghdad, where about 600 works thousand workers but is not effective ..
He pointed out that the reactivation of the private industrial sector means to reduce unemployment and poverty, and dry up the sources of terrorism and the protection of the national product and the reduction of import as well that this would encourage the return of Iraqi funds migratory
He spoke MP Jawad al-chairman of the economics of parliamentary and investment "to the importance of a regional and spatial development on the basis of economic patterns for each area, such as agriculture or tourism policy .. etc .. stressing the need to focus on the agricultural sector because agriculture is the Iraqi green oil and this means directing Planning around a few clear goals can be achieved
He said al-Bolani said there is a loss of the relationship positive among international institutions are required to create a state of coordination between fiscal and monetary policies and investment successes of the Central Bank in reducing inflation and maintaining the dollar down to decipher the downturn in the market and this is one of the safeguards of the trend towards private sector
He called al-Bolani: to rebuild next year's budget in 2016 by forming a high-level task team follow-up and monthly revenue within 90 days of this team puts a clear vision for economic reform required in Iraq.
For his part, between economic Behnam expert Elias Peter projections indicate the possibility of lower oil prices to more than the current decline, which requires us to study the structure of government consumer spending and find out what are the paragraphs that can be dispensed with and do not affect the overall situation, as well as the study of consumer spending and family ration card .
Added Peter said the government is not who runs the private sector but can this sector to grow effectively through bank guarantees and increase its contribution to the gross domestic product, which currently does not exceed 22 percent .. pointing out that for the private banking sector, the environment is still not suitable
Peter called to reconsider investment projects list, which reaches entrusted to about 273 trillion dinars and focus on projects that will be implemented over the coming years ..mahdhira of the danger of the continued absence of follow-up and evaluation systems for projects worth .. calling for the construction of such systems in all projects and services even in the hospitals
Peter also noted that the Iraqi economy is a centralized economy in terms of spending and revenue schools, hospitals and roads are used by the public and private sectors.
The economic expert Majid picture has started his wondering: How do we get out of this crisis? .. Replying "required to develop a strategy for that matter includes a reduction in the difference between the upper and lower limits for the entry and enforcement of laws and provide the final accounts and the restructuring of banks .. He pointed out that all of these things did not happen
The budget for the items are not prepared in accordance with the Constitution and there is no final accounts as has been disbursed $ 10 million in restructuring the banks, which included more training for 700 employees process but did not execute the program .. adding .. there is a huge potential to Iraq, whether individuals or owners of capital? But the desired dimensions Altnumeihan political trends ..
He pointed out that we do not know the size of the financial base for Iraq Is 44 trillion dinars and where is it and why Anstglha in the face of this crisis?
Dr. Wafa Mehdawi from the Faculty of Management and Economics / Mustansiriya University said: that the government program included six important themes which represents approach the work of public policy in Iraq .. pointing to the existence of convergence between the program points and the development plan, but the problem is the presence of dichotomy between the government program and the general budget
Showed Mahdawi that the philosophy of economic management based on the open area in front of the private sector and involvement in development according to their resources available .. pointing out that the private sector has a role in speculation and not on the economic side ..
and demanded Mehdawi investment directed towards the oil down to build a balanced development in the future are on the basis of regional and spatial development patterns and focus on agriculture, tourism and investment.
Lawyer Laith Hassan Shamsa / representative of the Iraqi Federation of Industries .. He said the industry is the key to the solution to the crisis because they help to create jobs instead of defined functions circles state, but the private industrial sector has not been mentioned in all the previous and current budgets, and in spite of the money that was allocated Ministry of Industry, but the industrial sector has not seen any development.
For his part, President of the Association of private banks / Wadih Handal spoke about the Arab and Islamic banks experience in Iraq, describing it as a failure because it while you got the money and the $ 7 million they began to export these funds abroad so they did not contribute to tackling unemployment .. He pointed out that the special has banks ability to contribute in the face of the crisis through the activation of the National divider.
Revealed businessman Abbas Shamara about the existence of a huge Iraqi funds in the countries of foreign banks are required to act to restore these funds as one of the solutions to address the deficit and encourage investment ..
and solutions also convert ration card amounting to $ 6 billion annually converted to agricultural and industrial by inviting international companies to invest in the land and the conversion of agricultural products to the industries they are converted into the market and be supported
And between Shamara: that Iraq's contributions to international funds and possible benefit from these funds to get through government funds to help cope with the crisis.
So called economic advisor Dr. Essam Lahibi to the formation of a higher economic council in Iraq, its decisions are binding on all .. calling for national industry and the public and private sectors and support agriculture support to achieve self-sufficiency and replace the letters of guarantee bonds loans.
Mr. Director of the Office of the Prime Minister, Dr. Mahdi Keywords spoke, commenting on some of the interventions made during the symposium ..
"It must focus on the basket of reforms to the private sector, elaborated within the Ministry of Planning and diversify the functions of sources of income and support the industry and focus on the legislation, industrial estates law and to find appropriate mechanisms to activate and implement this law
The Keywords to work is now underway in order to prepare law Economic Council to support private sector investment .. indicating the existence of a committee formed to provide a comprehensive study to enter into a partnership between the public and private sectors .. hoping to get out a good outcome of appropriate policies.
For his part, counting Associate Administrative Secretary General of the Council of Ministers, Mr. Obaid replace Freeh / study the reasons that led to this crisis to occur is an important step to address this phenomenon ..
He pointed out that the race and over the past ten years, he did not have any planning and economic development of our universe we tied our destiny Although the oil just learned that the oil may be exposed to the problems at any moment as well as the possibility of reserve dry up one day
He replaced on to say that "all the budgets of the world seeks to create jobs to absorb unemployment by supporting the industry and set up new plants and Land Reclamation and other all this need into the hands of working ..
As in Iraq, the budget is the addition of functional degrees, which means unemployment convincing .. describing the budget as a political agreement .. calling that they can be to prepare a three-year budget in the first year of implementation are mandatory In the second and third years shall be the flexibility by 15-20 percent
He replaced the public finances of the state policy should be a federal and can not be at the regions and provincial level, such as the imposition of taxes and fees .. pointing out that if we were we proceeded to pass the infrastructure law or aspiring to pay on credit for today we are in trouble, it is where we pay wages companies we tiger such financial distress?
He pointed to replace Salaries granted in Iraq is not high but are less salaries between neighboring countries, but the problem is the large numbers of employees.
And increased replace the Iraqi economy, the problems can be solved if we follow the appropriate solutions, including the activation gates mobile phone companies that will provide us with a big money as well as the security aspect in this area and resort to a method of temporary employment contracts in respect of projects and collection of revenue through taxes, which is in a lot of Source countries of the economy President.
For his part, warned Dr. Sami al-Araji / Chairman of the National Investment Commission of the stages will be the next two years Sabtan on Iraq because of the continuing decline in oil prices, which requires to take all appropriate measures and solutions to address this crisis
He revealed Araji for the Investment Authority develop an investment plan for the years ahead ten based on economic reform for all state institutions .. proposal to refer the staff funded companies central to retirement, according to the new law, 80 percent of the salary and thus we could provide 20 percent of those salaries as income to the state. .,
as well as a review of the investment law as to encourage national and foreign investment and promote the work per window and organize resources and to stop support for a number of goods and services that tax burden on the budget
Araji said that investment problem is the lack of allocations to the subject of the external structures for projects that include roads, electricity and water .. calling to activate the infrastructure law and take advantage of external conditions concessional
As for Dr. Qusay al-Jabri Dean of the Faculty of Business and Economics at the University of Mustansiriya / lost between: that there is an imbalance structurally in production and what is needed is reform of this gross imbalance for the deterioration of the investment climate because of terrorism and corruption ..
calling for the need to adopt a new strategy called peace and transparency strategy is developed by specialists in all areas of political, social and economic experts aimed at addressing the causes leading to the presence of broody for terrorism and what are the reasons behind the spread of corruption and then push for civil peace
He stressed Jabri the need to take bold decisions to shift resources toward infrastructure and the imposition of taxes on the subject of Iraq and resorting to the sales tax on services to be discriminated price for services according to the standard of living for all of the regions in health, education, electricity and water areas .. etc.
Economic Adviser to the Deputy Prime Minister for Economic Affairs / Jacob Shonia .. Between in his speech that "there is money big present in Iraq can be moved to finance the deficit and cope with the crisis which the funds allocated for projects 8971 project guestrooms at a cost of 282 trillion dinars ..
calling to stop this project, which has been pay 5 trillion dinars from Akiemha .. explaining that the move this money is through the allocation of part of investment projects after finding out what is the impact of these projects in GDP .. In addition to must strengthen the role of the private sector and activating the partnership between him and the public sector
Shonia also called for investment in oil and other mineral wealth and activation of efforts to eliminate corruption .. calling on the Ministry of Finance to move quickly to address the alien file.
For his part, Professor of Sociology Dr. Adnan Yassin spoke, describing corruption: it is the biggest development challenges in Iraq after it became a community structure, which led to sabotage the Iraqi man, because these systems value has become an incubator for corruption ..
Therefore, What we need to do is justice and the application of laws and Vision future and take advantage of the Iraqi experience migratory and activate tourism as an engine of development
Economic expert Dr. Amal Shlash .. She said in her presentation to the Ministry of Planning and concerned about directly addressing the economic policies and find a rational policies that can address the current situation .. indicating that address the deficit is not difficult,
and this gets through to give up a lot of Altfqat and reduce import a lot Goods and services that are entertaining and unnecessary, but contribute to the weakening of the national economy
At the end of the seminar, which is also attended by an agent of the Ministry of Planning and General Managers where .. Mr. and Planning Minister Dr Salman Jumaili stressed that the moment we are experiencing today is a moment of legislative we invested in order to activate such visions and constructive ideas that witnessed the symposium and to translate them into policies and laws that serve the Iraqi economy and help him to get out of the crisis
The seminar concluded to form a committee comprising a number of experts to formulate their findings to practical reality.