I’ve noticed an increase in the amount of articles that have been coming out in the Iraq media in regards to the deletion of the zeros and the distribution of the new currency. The articles are repetitive. I haven’t noticed anything new about which denominations will be replaced or what new denominations will be printed and circulated.
I did however find it amusing that the Central Bank of Iraq, Deputy Chairman Muzher, stated that there are many days where Iraq banks won’t’ accept deposits because of counting problems for large amounts of Iraqi dinar currency. As far as I know, when it comes to banking transactions, there has not been any issues with any Iraq bank accepting cash whether it be in Dinar or US dollars. The problems stem from the issues of making a deposit and then trying to move money from one bank to another. Iraq for the most part is still a cash base society and a large majority of Iraqi’s do not trust the banking system.
Turkey has decided to take it upon themselves to ban all incoming flights from Iraq for the sole reason that an Iraqi State Oil company still owes Turkey money. Sound familiar? It’s mind boggling that Iraq generates billions of dollars in oil sales each month and can’t make a $3 million dollar payment. This is owed by the Iraq’s State Oil Marketing Organization (SOMO). Turkey actually conducted several billion dollars in trade in 2010 with Iraq. Let’s just hope this doesn’t start a domino effect to other industries between the two countries. This ban will have an economic effect on Erbil which is in the Kurdistan Regional Government (KRG) which is supporting the ban by the Iraq Central Government. This is just the initial reports. We will have to wait and see if this is in fact confirmed and if Erbil is complying with the Central Government. It is pretty disappointing to know that the central government would put their economy in more dire straights with Turkey, a leading trade partner.
General Electric has officially announced that they will be opening an office in Iraq. GE Vice Chairman John Rice, who heads the International Operations for the company stated “Security is better but it is still a concern.” GE will be hiring Iraqi Citizens over the next three years. This is a great move for GE in stating publicly that they will be hiring Iraqi citizens. Creating jobs is the next phase for Iraq.
I mentioned yesterday that the Iraqi government is waiting on a response from the oil giant Exxon Mobile. They recently signed an oil contract with the Kurdistan Regional Government (KRG). It will be interesting to see what the Central Government’s response will be in regards to the arrangements with Exxon Mobile. I’m still scratching my head as to why a major oil company would sign an oil contract knowing that it would irritate the Central Baghdad government. Media reports are now hinting that Exxon Mobile could possibly be replaced by Dutch Shell Oil company.
Iraq may be faced with a financial crisis according to Iraqi Vice President, Tareq Al-Hashimi who recently attended the 5th Political Forum of the Renewal Movement. The Iraq federal budget 2012, is based on a $85 barrel of oil. If oil prices fall below the budget levels it would be problematic for the Iraqi government.
Speaking of the Federal Budget, the Ministry of Finance would like all Iraqi Ministries to conduct a sweep of their own department accounts and report those funds to the MoF. Not one ministry has come forth to disclose how much funds they have left over in their Ministry accounts from the previous years. This could create a problem for the Prime Minister who recently stated that he would like to send his 2012 Federal Budget to the Iraqi Parliament by next month.