New developments in the cause of lifting the immunity from certain Parliament members may have come to a close. It looks like the immunity of those in parliament have been lifted on the condition that the Iraq Council of Representatives (CoR) withdraw there petitions to question the Ministries. The powers to be are asking that the (CoR) can only question Ministry members only when they have sufficient evidence of any wrong doing.
Hopefully this would give the investigators of the Integrity commission more credibility to start acting on the many cases that they have ongoing and cases that just have been sitting on the shelf. In the last few months many arrest warrants have been served on warrants for Iraqi’s being accused of various crimes.
You remember a few weeks ago the Iraqi Ministry of Finance had decided to sell treasury bonds at a 2 percent interest rate. The majority of the funds will be given to the Ministry of Electricity and in financing the water projects and waterways. The treasury bonds will be included in the 2010 year budget just as soon as it is approved by the Council of Representatives (CoR) they haven’t approved anything as of yet with everything else that is going on with the Parliament.
When the Iraq government submitted the 2009 budget to the Iraq parliament out of the gate it was already facing a 27% deficit before a single dollar made it to the government coffers. Iraq depends on oil sales to pay for the 2009 budget which has been seriously lacking since the high price of oil last year. An economic expert in Iraq recently stated that the treasury bond sell is not sufficient to plug the deficit and meet the needs of the Iraqi economy, and that the Ministry of Finance cannot issue more treasury bonds.
There were several options for the Iraqi government to close the deficit gap. And issuing one year treasury bonds was one of them. Other options were.
To seek foreign loans (London Investment Conference April 29)
Relying on Surplus from previous budgets
Resorting to funds that are unused to various Ministries and governates
The Central Bank of Iraq in regards to the treasury bonds expressed reservations about the deal and everyone is waiting on approval from the Iraqi Parliament. That is why the meeting with the Council of Representatives will be coming up with the Ministry of Finance and the Central Bank of Iraq Director. Just so you all know the Council of Representatives rejected treasury bonds before. I am confident that the CoR will pass the treasury bills it is just a matter of when. I am sure it will be after the two meeting of minds between the MoF and CBI.
The Iraqi government is confident that they will be able to cover the 2009 budget deficit after selling the treasury bonds, loan from the IMF for 7 Billion dollars, the KRG government pumping oil in the Al-Turiq and Taqtaq oil wells in Northern Iraq. The Iraq government is counting on the higher oil prices next year to help them recover from the deficit in the budget.
The bonds the Iraq government plans to issue is 2.4 billion dollars for the electricity contracts and the other 600 million dollars will be for the water and railway projects.
The buying of the treasury bonds will be up to the banks and not the CBI and will be conducted in U.S. Dollars. It is not known if the Iraq government will be selling more treasury after the 2010 bonds have been fully paid back and they like to think that the selling of treasury bonds is for emergency purposes only.
When talking about investments in Iraq the Iraq government is looking at economic reforms and getting away from the complex system they have been operating under. The ‘One window’ system instead of the long drawn out mind boggling system that nobody know how to navigate the complex system of how to secure your investment.
Iraq is attempting to improve the investing climate for foreign investors which is not going as well as expected due to Investment law not completed as it needs to be amended and also the fact that the GoI is looking at tax exemptions for investors, and talking about leasing land for 50 years with a renewal of 100 years which would be good for those foreign investors that are thinking of coming to Iraq. Look for in the future for foreign investors to own land in Iraq.
Important Iraq Dates
July 25, 2009 – KRG Parliament Elections
July 31, 2009 – Iraq Referendum Vote (SOFA Security Agreement)
January 16, 2010 – National Parliamentary Elections
August 21st to September 19th 2009 – Ramadan
October 2009 – International Compact with Iraq– Date to be Announced – Baghdad
December 31, 2009 – Development Fund for Iraq (DFI) expires
December 31, 2009 – Article Seven U.N. Charter expires
More to follow…
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