Iraq Banking & Finance News

World Bank gives $200m for Stability in Liberated Areas

The Ministry of Labour and Social Affairs announced that the World Bank has allocated $200 million to implement an emergency project to support stability in the liberated areas.

An official spokesman for the Ministry of Labour and Social Affairs stated:

“The World Bank has allocated $200 million for the implementation of the emergency project to support the stability of the liberated areas, as it will be coordinated with the General Secretariat of the Council of Ministers and the ministries of planning, health and work for the purpose of implementing paragraphs of this project.”

(Source: GardaWorld)

Central Bank to Tackle Hoarding of Iraqi Dinars

By John Lee.

The Central Bank of Iraq (CBI) has held symposium entitled “Analysis of the phenomenon of Hoarding in Iraq“, addressing the problem of people hoarding Iraqi dinars (IQD), and not making them available to the banking system.

During the seminar, the Governor of the Central Bank, Dr. Ali Mohsen Ismail (pictured), pointed out that cash is not available as planned, and that the CBI is drawing up plans to solve this problem and attract money into the banking system.

According to a CBI statement, the term “hoarding” is used in its economic sense to mean “holding money and imprisoning it from circulation or keeping them in the boxes inside the house and not taking them out to trade in the markets.

(Source: Central Bank of Iraq)

How Iraqi Entrepreneurs can Raise Startup Money Without a Loan

By Hal Miran, Editor-in-Chief, Bite.Tech. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

How Iraqi Entrepreneurs can Raise Startup Money Without a Loan

Raising money for your business is always a challenge. Every startup must prepare and plan in detail how they intend to raise funds for their new startup.

In countries like Iraq, the lack of access to bank loans makes it more difficult for tech entrepreneurs to raise money for their company. This is made trickier by a lack of angel or venture capital money. So, what can you do to raise startup money without a loan?

1. First, look on the bright side!

First of all, looking for business financing externally should be your last option, not your first. When it comes to venture capital or angel investment, you give up a portion of your company in exchange for money and often, strategic advice and help. But, it usually comes with a lot of conditions attached.

2. Bootstrap your way to tech startup success

Bootstrapping is the process of financing a new company with minimal financial resources. It is the first method to raise startup financing that every tech entrepreneur should look into.

A great bootstrapping strategy typically involves using your own money and asking people close to you to invest. This is coupled with clever use of the money you have to make it go as far as possible towards your business success.

Where possible, use free resources and study how to implement growth hacking principles to accelerate your growth at minimal or zero cost. There are now so many incredible business resources online that are free and weren’t available for the tech startup entrepreneur of ten years ago.

How can you raise bootstrapping money for your startup? Here are the most immediate options:

a. Your own personal money

b. Ask your friends and family

c. Attend essential networking events such as hackathons and bootcamps to meet potential investors and make new contacts

US Collaborates with Iraq to Sanction ISIS Finance Emir

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has taken action targeting Salim Mustafa Muhammad al-Mansur (Mansur), an Islamic State of Iraq and Syria (ISIS) finance emir.

Mansur was designated as a Specially Designated Global Terrorist pursuant to Executive Order 13224 for acting for or on behalf of ISIS. As a result of today’s designation, all property and interests in property of Mansur subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with him.

The Treasury Department continues in its determined efforts to disrupt ISIS’s financial networks regardless of geographic location.  Treasury has an unwavering dedication to safeguard the United States and international financial systems from exploitation by ISIS.

The designation also highlights the U.S. government’s continued commitment to work in concert with the Government of Iraq, which has also taken steps under its domestic authorities to bar Mansur from the Iraqi financial system and freeze any assets he may have subject to Iraq’s jurisdiction.

OFAC Director John E. Smith said:

“Treasury continues to work in close collaboration with the Government of Iraq to dismantle ISIS financial networks both inside and outside of ISIS-controlled territory … This action underscores the United States’ resolve to work with international partners to further restrict ISIS’s ability to abuse the U.S. and Iraqi financial systems.”

Mansur’s involvement with ISIS and its predecessor, al-Qa’ida in Iraq (AQI), dates back to at least late 2009 when Mansur was an AQI commander involved in fundraising activities to support terrorism in Iraq.

In early 2014, Mansur was involved in moving hundreds of thousands of Iraqi dinars to ISIS in Mosul.  In addition, in 2015, he laundered and transferred money on behalf of ISIS, and as of mid-2016, he was responsible for selling crude oil that ISIS extracted from oil fields in Iraq and Syria.  As of early 2017, Mansur was an ISIS finance emir for Mosul who had moved to Turkey.

For identifying information on the individual designated today, click here.

(Sources: OFAC, CBI)

France to Lend $515m to Iraq in 2017

Mr Jean-Yves Le Drian, France’s Minister for Europe and Foreign Affairs, visited Iraq on 25 and 26 August with Ms Florence Parly, Minister for the Armed Forces.

Mr Jean-Yves Le Drian met with the President of the Republic of Iraq, Mr Fuad Masum, the Prime Minister, Haider al-Abadi, and his Iraqi counterpart, Mr Ibrahim al-Jaafari. He also met with Kurdish authorities, including the President of the Kurdistan Regional Government, Mr Masoud Barzani.

The victory of Iraqi forces in Mosul represents a decisive blow to Daesh’s territorial claims, and the group’s grasp on Iraqi territory continues to weaken. This battle was launched in October 2016 with the French army providing support to the Iraqi forces whose bravery is commended by Mr Jean-Yves Le Drian.

The fight against Daesh must continue in order to liberate the areas of Iraq still under occupation, notably Tal Afar, Hawija and the Anbar province. Mr Jean-Yves Le Drian provided reassurance of France’s constant commitment alongside the Iraq to defeat the terrorist organization and also stressed the need to protect civilians.

France will support the stabilization and reconstruction of Iraq to achieve sustainable peace which reconciles all parts of Iraqi society. It is with this goal in mind that Mr Jean-Yves Le Drian confirmed the attribution of a loan of €430 million [$515 million] to Iraq for 2017. This loan will allow the country to access international funding programmes with greater ease, something which is key to helping the reconstruction phase.

This visit also gives new momentum to the relationship between France and Iraq in all areas. France wishes to develop its links with Iraq in all fields, including political dialogue, economic relations or cooperation efforts.

(Source: French Ministry for Europe and Foreign Affairs)

IMF: “Iraq is Facing a Double Shock”

On August 1, 2017, the Executive Board of the International Monetary Fund (IMF) concluded the 2017 Article IV consultation with Iraq.

Iraq is facing a double shock arising from the conflict with ISIS and the plunge in oil prices.

In 2016, real GDP increased by 11 percent owing to a 25 percent increase in oil production, which was little affected by the conflict with ISIS. This year, economic activity is expected to remain muted due to a 1.5 percent contraction in oil production owing to the OPEC + agreement to reduce oil production and only a modest recovery of the non-oil sector.

The decline in oil prices has driven the decline of Iraq’s international reserves from $54 billion at end-2015 to $45 billion at end-2016. Fiscal pressures are ongoing, with the government deficit increasing from 12 percent of GDP in 2015 to 14 percent in 2016 despite the ongoing fiscal consolidation, due to weaker oil prices and rising humanitarian and security spending.

The authorities have appropriately maintained the exchange rate peg. The simplification of documentation requirements implemented by the Central Bank of Iraq led to a decline in the parallel market spread to 6 percent in June 2017.

Medium-term growth prospects are positive. Growth will be driven by the projected moderate increase in oil production and the rebound in non-oil growth supported by the expected improvement in security and implementation of structural reform. Risks remain very high, however, arising primarily from volatile security, political tensions, and poor policy implementation.

The Fund is supporting Iraq through a three-year Stand-By Arrangement in the amount of SDR 3.831 million ($5.380 billion), equivalent to 230 percent of quota.

Full statement here.

30-page report can be downloaded here.

(Source: IMF)

UKEF helps GE and Enka secure Power Contract

UK Export Finance (UKEF) has announced that it is supporting the Enka UK and General Electric (GE) consortium with US$117 million in financing to deliver two critical power projects in Iraq.

Rt Hon. Greg Hands MP (pictured), UK Minister for International Trade, welcomed the news, saying:

The Department for International Trade through UK Export Finance is delighted to be supporting these power projects, which will significantly enhance the energy sector in Iraq.

“Construction of the projects also presents huge – and hugely exciting – opportunities for UK exporters, and clearly demonstrates the UK’s leadership in the energy sector.”

UKEF has provided a guarantee to support the government of Iraq in its contract with the GE-led consortium.

This support will finance the early stages of construction of two GE-powered 750-megawatt gas-fired power plants at Dhi Qar and Samawa in southern Iraq. Once complete, the power plants will help to alleviate severe energy shortages in Iraq, supporting the country’s infrastructure development and energy security. Further financing may follow to support additional UK procurement.

UKEF and the Department for International Trade teams in Iraq and Turkey are working closely with Enka UK and GE to source at least US$250 million worth of goods and services from the UK to deliver the projects in coming months.

A supplier fair was held in March, in partnership with energy sector bodies NOF Energy and the Energy Industry Council, to connect companies in the UK supply chain with the projects.

The move demonstrates GE’s commitment to developing its UK supply chain following the agreement between GE and UKEF signed in 2015. GE is the engineering, procurement and construction (EPC) contractor for the projects, which were announced in January, and Enka UK is the main subcontractor.

This support follows an agreement between the governments of the UK and Iraq, signed in March, reaffirming the UK’s commitment to supporting Iraq’s continued economic development.

Yavuz Akturk, Director at Enka UK, said:

We are very pleased to see UK Export Finance, the leading ECA active in Iraq, supporting these projects. It would not have been possible for us to enter into these projects with GE without their support.

“These projects will help the people in the country by increasing the electrification rate while providing great opportunities for UK exporters of goods and services to participate in these transformational projects in Iraq.”

Guto Davies, Head of ECA Financing, Global Capital Advisory, GE Energy Financial Services, said:

“The closing of this facility supports the construction of these two new power plants and GE’s commitment in Iraq. UK Export Finance and the Department for International Trade in Iraq have been instrumental in helping us achieve this critical milestone.”

(Source: UK)

Talal Abu-Ghazaleh cooperation with Central Bank of Iraq

A delegation representing Talal Abu-Ghazaleh Organization (TAG-Org) agreed with the Governor of the Central Bank of Iraq (CBI), Mr. Ali Mohsin Ismail Al-Alaq, means of cooperation between the two parties.

The delegation headed by Mr. Ahmad Obeidat, Executive Director of the Baghdad Office, presented the various services provided by TAG-Org, particularly in the fields of Information Technology and Risk Management.

Obeidat expressed TAG-Org’s readiness to present its professional services through Baghdad Office and its highly trained and qualified staff.

For his part, Al-Alaq emphasized that CBI is fully prepared to cooperate with TAG-Org, especially where consistent with CBI’s objectives related to the implementation of work practices compatible with the best international standards.

Discussions with Al-Alaq incorporated the need to develop a plan for the training and the development of CBI’s human resources in the field of Information Technology, as well as CBI’s extensive efforts to obtain implementation of IT technologies certification based on international standards.

Al-Alaq stated that the general approach now is to develop banking services and to introduce new banking products and e-payment systems based on advanced technologies to meet challenges facing the banking sector and to set up an advanced monitoring system of all e-banking activities and services.

$191m Japanese Financing for Power Plant

On August 5, the Japan International Cooperation Agency (JICA) under the Government of Japan signed a loan agreement with the Government of the Republic of Iraq in Baghdad to provide a Japanese ODA loan of up to 21.556 billion yen (equivalent to approximately USD 191 million[1]) for the Hartha Thermal Power Station Rehabilitation Project (Phase 2).

At the signing ceremony at the government palace in Baghdad, the loan agreement was signed between Dr. Maher Hammad Johan, Acting Deputy Minister of Finance and Mr. Yuho Hayakawa, Chief Representative of JICA Iraq office in the presence of H.E. Dr. Haider Al-Abadi, Prime Minster of Iraq, Mr. Kentaro Sonoura, Special Advisor to the Prime Minister of Japan, and H.E. Mr. Fumio Iwai, Japanese Ambassador to Iraq.

This concessional ODA loan, with the interest rate of JPY LIBOR +0.05% (variable) for the main portion and fixed 0.01% for the consulting services and with the repayment period of 15 years (including 5 year grace period), is provided based on the Exchange of Notes between Iraqi and Japanese Governments just signed on the same day.

The Hartha Thermal Power Station, with four units of 200 megawatts (MW) each, was originally built to generate 800 MW in total.  The power station was constructed as one of the largest power plants in Basrah Governorate by the Japanese companies with Japan’s financial assistance in 1982.

However, due to aging as well as serious damages during the wartimes in the past, operations of the two units, out of the total four units in the station, have been fully suspended for years.  The remaining two units, that is, Unit No. 1 and No. 4, have continued their operations by great maintenance efforts of the staff of Ministry of Electricity in spite of huge deterioration of their generation capacities and frequent disruptions of power production.

Stock Market Review for July: Foreigners Selling, Locals Buying

By Ahmed Tabaqchali (pictured), CIO of Asia Frontier Capital (AFC) Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The equity market, as measured by the RSISUSD index was down -4.4% for the month, recovering from lows of -10.0%, on further declining turnover.

The average daily turnover for July was about 10% lower than the average of the prior four months in which the market was declining.

The average turnover during the up months, i.e. November-February, was about 1.8 times the levels of those of the down months (chart below) lending support to the bottoming/recovery thesis following the -68% decline from the early 2014 peak to May 2016 bottom.

Foreign selling continued to weigh on the market, but locals tend to appreciate the true values of local assets especially at extreme valuations and, at least now, seem to have acted upon this.

Please click here to download Ahmed Tabaqchali’s full report.

Mr Tabaqchali is the CIO of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years’ experience in US and MENA markets.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.