Thursday, June 5, 2014

Betting on Iraq

Iraq Dinar

Jim Cramer on the Iraq Dinar

The Iraqi Ministry of Oil Declares its Export for May 2014

The Iraqi ministry of oil announced its oil exports for the previous May 2014 according to the primary statistics of SOMO Company, which was (80.036) million barrels and their achieved outcome which is about (8.068) billion dollars, which was higher than the previous April In spite of the stoppage on Ceyhan – Kirkuk pipeline since March the 2nd, because of the continuous sabotage and terrorist operations. Mr. Assim Jihad, the spokesman of the ministry of oil shown that the exports & outcome for May from the southern ports was 2,582 million barrels/ day which is the highest since 2003. And the oil price was (100.080) dollars for the single barrel. Mr. Jihad said also that the above quantities was shipped by the different identities international companies to the ports of Basra and Khor Al-Amia and SPM from the Arab gulf. Iraqi Ministry of Oil

Iraq Starts The Exportation From (SPM3) With a Power of 800 Thousand B/D

Mr. Assim Jihad the spokesman of the ministry of oil said that the ministry started the exportation from the third floating terminal with a power of 800 thousand barrels/ day in the south of Iraq, within the project of Exportation increase which contains the establishment of three giant reservoirs in addition to the extension of three marine pipelines with four floating terminals and a fifth later, depending on the Japanese loan. Mr. Jihad said that Iraq raised its exports through the last two years by operating two single floating terminals in the Iraqi territorial waters, with a power of 800 thousand barrels/ day for each. Mr. Jihad said also that Iraq is aiming to raise the exportation power to 4, 5 million barrels/ day which will offer a higher flexibility of exportation.It is worthy to mention that, the ministry of oil declared earlier in this year for the finishing of the central counters platform which contains developed devices and electronic meters that matches the international standards, In addition to control systems that controls the exported oil quantities from the four terminals to achieve higher capacity of crude oil production. The Iraqi Ministry of Oil

Sunday, February 9, 2014

Iraq Financial News: IMF warns Iraq budget increasingly vulnerable to oil price

Posted on January 27, 2014 Iraq’s state finances are increasingly vulnerable to a drop in oil prices and the government could have difficulty financing this year’s budget plan, an International Monetary Fund official said on Monday. “There is a structural problem. The fiscal policy depends crucially on oil revenues and that dependence has been increasing,” Carlo Sdralevich, the IMF’s mission chief for Iraq, told a financial conference in Dubai. “This trend is concerning because the break-even price has been increasing in the last few years.” Iraq, which depends on crude oil exports for some 93 percent of government revenues, needed an average oil price of $106.1 per barrel in 2013 to balance its budget, up from $95 in 2011 because of rising expenditure, the IMF estimated last October. But Brent crude oil, now around $107, is expected to drop gradually in the next two years, to $103 in 2014 and $100 in 2015, as a shale boom in the United States and increasing output in Iraq keep the market well supplied, according to a Reuters poll of analysts. “Another concern is that spending is pretty rigid. There is a lot of current spending and when the government does not have enough revenues it ends up cutting investment, which is of course negative for the long-term growth,” Sdralevich said. The IMF estimates the state budget of Iraq, which has been hit by a fresh surge of sectarian violence, slipped into a deficit of 0.7 percent of gross domestic product last year, the first deficit since 2010, from a surplus of 4.1 percent in 2012. Sdralevich said this year’s budget draft, which is currently being discussed by parliament, was very expansionary in its present form and might be difficult to finance. Earlier this month, Iraqi Kurdish ministers walked out of a cabinet session in a revenue dispute involving the draft 2014 budget, which is estimated at 174.6 trillion dinars ($150.1 billion). The head of parliament’s Treasury committee told Reuters that the budget, swollen by extra expenditure, would “collapse” if the state kept paying Iraq’s northern Kurdistan region its 17 percent share of oil revenues even as the Kurds withheld oil export proceeds. He said the draft budget projected a deficit of about 21 trillion dinars – assuming the Kurds paid the Treasury the revenue from budgeted oil exports of 400,000 barrels per day. Industry sources say that target far exceeds Kurdistan’s current export capacity of around 255,000 bpd. In a previous report, the IMF criticised Iraq for poor budget planning and execution, large off-budget spending, low investment execution rates, and serious deficiencies in fiscal reporting. CENTRAL BANK Sdralevich also said Iraq should ensure the central bank’s (CBI) independence from government policy, keeping the CBI’s reserve management separate from the Development Fund for Iraq (DFI). “The crucial point which we really insist on is maintaining the current architecture,” he said, echoing comments in an IMF report last July. “Maintaining independence of the CBI…is very important. It really underpins the stable exchange rate which in the context of Iraq’s economy is a crucial anchor.” Reserves in the DFI, which the government uses for public investments, plunged to $6.5 billion at the end of 2013 from $18.5 billion in 2012, Sdralevich said. That, together with rising budget spending, triggered concern that the government might eventually use the central bank’s $77 billion of foreign currency reserves to finance state expenditure, which could weaken the currency and spur inflation. Source: Reuters

Iraq Banking News: Iraq Banks Adopting Technology to Boost Business

Posted on January 27, 2014 While Iraq wrestles with a pickup in brutal violence again, the country’s bankers continue to painstakingly modernize and build a banking sector that is crucial to the country’s economic resurgence. Take National Bank of Iraq, for example: this Baghdad-listed lender with eight branches is introducing internet and mobile banking this year as well as installing 20 ATMs, a major step for a bank that operates in a predominantly cash-based economy with outdated technology. “We’re coming from traditional, manual banking: this is a revolution,” said the bank’s vice-chairman Ayman Abu-Dhaim on the sidelines of a two-day business event promoting finance in Iraq. National Bank of Iraq is one of nearly 40 lenders operating in the country that holds the fifth-largest known oil reserves in the world. It competes with other local, many family-owned, banks and a growing number of more savvy financial groups from abroad such as Standard Chartered and Citigroup. Sami al-Araji, chairman of Iraq’s National Investment Commission, told the conference about the nationwide investment plan to the tune of $357 billion aimed at jumpstarting its economy. He also spoke of the country’s $1 trillion spending needs to rebuild and upgrade its infrastructure. The lion’s share of the funding for those investments will have to come from Iraq’s oil and gas revenues. In addition, Iraq’s gross domestic product could grow at an average of 7% between now and 2024, effectively tripling the size of the economy, according to Bank of America Merrill Lynch estimates. So for banks that can stomach the security and the inherent volatility issues, Iraq indeed looks like the place to be. But the challenges remain immense as the banking sector lags in terms of regulation and technology while also lacking sufficient human resources, bankers said. “It is surprising that in this day and age some of the international companies we talk to are saying they need to carry with them hundreds of thousands of dollars…to make their basic transactions work. This is clearly not a sustainable model. A cash economy is an old economy, a cash economy doesn’t work efficiently and is insecure,” said Gavin Wishart, chief executive of Standard Chartered in Iraq. Standard Chartered Iraq’s Gavin Wishart talking about how the country’s banks need to adopt modern technology in order to become more efficient. “Certain banks in Iraq that embrace technology, digitization and broaden their offering of consumer banking products…these are the banks of the future,” Mr. Wishart said. Standard Chartered Iraq’s Mr. Wishart discussing the immense growth opportunities there as the country is rebuilding its infrastructure. Source: Wall Street Journa

Iraq Financial News: Iraq’s biggest banks claim ‘security concerns exaggerated

Posted on January 27, 2014 Iraq’s biggest banks have claimed security concerns in the country are exaggerated, imploring international investors to participate in the $1 trillion rebuilding effort. Central Bank of Iraq governor Abdul Bassit Turki Saeed said the return on investment in the still turbulent country far outweighed the risks. “If I was an foreign investor, for example, if I compare what I would gain and the [risks] of it, definitely I would be in Iraq since yesterday,” he said through a translator on the sidelines of the Iraq Finance 2014 conference in Dubai. “If we did have active economic [growth] in Iraq, this definitely would bring security because it would create chances and develop some ambitious visions.” Chairwoman and CEO of the largest bank in Iraq, the Trade Bank of Iraq (TBI), Hamdiyah Al Jaff, said the ongoing conflict was misunderstood and did not affect the new development. She called on international banks and investors to participate in the country’s huge infrastructure projects. “We should all be inside Iraq without any fear or hesitation because the market of Iraq needs you as much as you need opportunities,” she said. “We do not want to carry on these concerns regarding the security in Iraq because it’s not as it is shown in the media. The media exaggerate in presenting the Iraq security situation. “It’s not excellent, however it’s completely different from difficulties we faced from 2000-2009.” The comments come despite renewed sectarian violence in recent months. On Sunday, authorities said car bombings and shootings killed nine people across Iraq, while militants kidnapped soldiers in the embattled province of Anbar, where Al Qaeda-linked fighters hold portions of two major cities. Meanwhile the country is attempting to rebuild infrastructure destroyed during three decades of conflict, including electricity supply, sewerage, health and education facilities, roads and 3 million homes. The government last year approved a $1 trillion infrastructure spending program over the next 10 years. It is relying on financing from a doubling of oil output, the privatisation of public assets including three banks and foreign direct investment. Al Jaff said international banks were setting up in Iraq but they had made little input to the country’s restructure. “We have very strong relations with big banking institutions in the world, however, frankly speaking, we haven’t seen, so far, any serious interest by those banks to support building Iraq,” she said. “The Trade Bank of Iraq is a government bank and the guarantees it presents can be considered as government guarantees and we’re ready to support financing infrastructure projects. “We will work together to eliminate obstacles to stability which is really creating a win-win situation for all of us.” Country manager of a leading private bank, Byblos Bank, Jean Bassil, said while he agreed the security situation was not a major concern, there were still numerous reforms needed to strengthen the country’s banking sector and reduce risk for both banks and customers. He called for a credit bureau, similar to the one being established in the UAE, so banks could have greater confidence in lending, while building trust in the sector for potential customers. “There is much work to be done to develop the banking sector in Iraq. What really interests us as a private bank in Iraq … is the information we can exchange through the Central Bank in terms of risk management, so we can realise any financial deal that comes to our door,” Bassil told Arabian Business. “This is being developed and we hope to see this up and running in 2014.” For Bassil, who is Lebanese, operating amid a reasonable possibility of further attacks in the country was part of doing business in Iraq. “This is becoming the daily situation for us,” he said. “There is a risk of course, it’s a high risk, but we are managing it. “It’s not as bad as the media portrays it. Once you know how to go by, it’s okay.” Source: Arabian Business

Iraq Reconstruction News: Iraq plans state investment bank to push projects

Posted on January 30, 2014 india-and-iraq-agree-for-beyond-buyer-seller-tiesIraq plans to establish a state-funded investment bank to help finance big infrastructure projects and steer money towards private sector companies which need it, a senior government official said on Monday. An underdeveloped, inefficient banking system has hindered efforts to mobilize funds for investment in Iraq. Bankers at a financial conference in Dubai on Monday described how some Iraqi corporate executives carried around tens of thousands of dollars in cash to settle transactions that are too inconvenient to do through the banking system. “We need this (state-funded investment bank) to push forward the economy,” Sami Al-Araji, chairman of the National Investment Commission, told Reuters on the sidelines of the conference. “Our existing commercial banks do not have the skills or experience.” The new institution, Investment and Development Bank of Iraq, would receive 1 percent of annual state budget allocations over seven years under a proposal that will be sent to parliament for approval, he said. That arrangement, if it goes ahead, could eventually provide the new bank with over $10 billion to invest; this year’s state budget is estimated at 174.6 trillion dinars ($150 billion). Despite the militant violence plaguing Iraq, the economy has managed to keep expanding on the back of oil output; the International Monetary Fund forecasts annual gross domestic product growth of more than 6 percent from 2014 to 2018. Iraq already has 23 private conventional banks and nine private Islamic institutions, as well as seven state banks and 16 foreign banks operating in the country, according to the central bank website. Araji said a dedicated investment bank could participate in financing some of the tens of billions of dollars of infrastructure projects which the government plans over the next several years. It could also help arrange funding for small and medium-sized enterprises, which authorities want to develop to create jobs and diversify the economy beyond oil. The proposal for the investment bank is part of a series of planned amendments to investment laws which will be submitted to parliament, Araji said. A parliamentary election is scheduled for April 30, so the proposal would probably be considered by Iraq’s next parliament. Source: Reuters