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BAGHDAD — Oil-rich Iraq's parliament on Monday approved a record $153 billion a year budget plan that boosts spending on infrastructure and public sector jobs in the war-scarred nation.

The three-year financial plan also hands the federal government in Baghdad greater control over lucrative oil exports from the northern autonomous Kurdistan region.

After months of wrangling and several late-night sessions, lawmakers agreed on a 198.9 trillion dinar ($153 billion) budget for this fiscal year, and the same amount in 2024 and 2025, subject to future amendments.

With annual revenues projected to reach $103.4 billion, based on an oil price of $70 per barrel, the fiscal plan bloats Iraq's budget deficit to over $49.5 billion, more than double the figure in 2021.

Energy sales account for about 90 per cent of income for Iraq, a country still struggling to emerge from decades of war and insurgency and plagued by rampant corruption.

Lawmakers approved the bill after months of wrangling over its components in a country long accustomed to budget delays.

Much of the new spending pays for wages in Iraq's huge public sector.

Economist Ahmed Tabaqchali estimated a wave of recruitment would create 600,000 more public sector jobs, with wages and pensions accounting for more than $58 billion a year.

Tabaqchali, a visiting fellow at the London School of Economics' Middle East Centre, warned that this could be unsustainable.

"The vulnerability for Iraq is, should oil prices decline, that would mean that you would have to cut spending, and since you can't cut fixed expenditures, you'll have to cut on investment," he told AFP.

Kurdish oil wealth

Much debate focused on the Kurdish regional government, which had for years earned billions by exporting oil via Turkey without the Iraqi federal government's approval.

Those operations ceased in March after international arbitrators recognised Baghdad's exclusive right to manage the exports.

Baghdad and the Kurdish regional government agreed in April to grant the federal government greater control over Kurdish crude exports.

Under the budget, 400,000 barrels per day will be shipped from Kurdistan to Baghdad, with revenues going to a central bank account overseen by Baghdad.

Meanwhile 12.7 per cent of Iraq's public spending will go to Kurdistan.

The budget also sets aside $37.9 billion for infrastructure investment, labelled a priority by Prime Minister Mohammed Shia Al Sudani in a country where basic services have long been sorely lacking.

Most spending is financed through energy exports, but experts have warned Iraq it must wean itself off its overdependence on oil.

The International Monetary Fund said last month that "a significantly tighter fiscal policy is needed to strengthen resilience and reduce the government's dependence on oil revenues while safeguarding critical social spending needs".

TUNIS — The European Union on Sunday offered Tunisia more than 1 billion euros in aid to boost its crisis-hit economy and reduce the flow of irregular migrants across the Mediterranean Sea. 

The North African country, highly indebted and in talks for an IMF bailout loan, is a gateway for migrants and asylum-seekers attempting the dangerous voyages to Europe. 

The EU is ready to offer Tunisia 900 million euros in long-term aid plus 150 million euros in immediate support in a bid to "strengthen our relationship", European Commission head Ursula von der Leyen said on a joint visit with the Italian and Dutch prime ministers.

Aside from trade and investment, it would help Tunisia with border management and to combat human trafficking, with support worth 100 million euros this year, she said.

"We both have a vast interest in breaking the cynical business model of smugglers and traffickers," said von der Leyen. "It is horrible to see how they deliberately risk human lives for profit."

She said other joint projects with the bloc would help Tunisia export clean renewable energy to Europe, and deliver high-speed broadband, all with the aim of creating jobs and to "boost growth here in Tunisia".

Von der Leyen, after the four-way talks with President Kais Saied, said she hoped an EU-Tunisia agreement could be signed before the next European summit later this month.

'Long and difficult road'

She stressed that the EU is Tunisia's top trade and investment partner and had "supported Tunisia's path to democracy" since it became the birthplace of the Arab Spring popular revolts in 2011, describing it as "a long and difficult road".

Von der Leyen visited Tunisia with Italy's Prime Minister Giorgia Meloni and her Dutch counterpart Mark Rutte, for talks with Saied, who has assumed near total governing powers over the country since 2021.

Rights groups have accused him of an "authoritarian drift" for restricting civil liberties and jailing opposition activists in what Amnesty International has labelled "a witch hunt".

EU governments, under pressure to reduce migrant arrivals, last week agreed on steps to fast-track migrant returns to their countries of origin or transit countries deemed "safe", including Tunisia.

Italy's far-right premier, Meloni, on her second Tunisia visit within a week, said she was "satisfied" with the EU offer of "a real partnership to face the migratory crisis and the question of development" in Tunisia.

Tunisia lies less than 150 kilometres from the Italian island of Lampedusa, and has long been a stepping stone for migrants, mostly from Sub-Saharan African countries.

According to the latest statistics from the UN's refugee agency, 51,215 migrants have arrived illegally by sea in Italy so far this year, up more than 150 per cent from last year — about half from Tunisia, the rest from Libya.

Nearly 1,000 have died or disappeared in shipwrecks this year.

An increasing number of the migrants hail from Tunisia, whose tourism-based economy was hit hard by the COVID pandemic and which is now in a serious crisis marked by high inflation and unemployment.

Not Europe's 

'border guard' 

Tunisia reached an in-principle deal last year for an IMF bailout loan of around $2 billion. 

But talks have since stalled over the reforms demanded by the fund, especially on state-run enterprises and the scrapping of state subsidies on basic goods, which Tunis fears could heighten social tensions.

Saied on Tuesday again slammed what he has termed the "diktats" of the Washington-based IMF.

On the migration issue, Saied has in the past vowed "urgent measures" to tackle arrivals in Tunisia. 

Tunisian rights groups accused him of hate speech after he charged in February that "hordes" of Sub-Saharan African migrants were responsible for rising crime and posed a "demographic" threat to the Arab-majority country.

Attacks on migrants rose sharply after his speech, and thousands fled the country. 

Saied on Saturday visited a migrant camp in Sfax, a coastal city from where many embark on the sea voyages, and said he rejected turning Tunisia into Europe's "border guard".

The Tunisian Forum for Economic and Social Rights denounced the visit by the three European leaders as an attempt to "blackmail" Tunisia with an offer of financial support in return for stepped up border vigilance.

ISTANBUL, June 9, 2023 — Turkish President Recep Tayyip Erdogan appointed former Wall Street executive Hafize Gaye Erkan as central bank governor on Friday, signalling a possible shift from his unconventional policies against soaring inflation.

Erkan — a former chief executive of US real estate finance firm Greystone, co-CEO of First Republic Bank and managing director at Goldman Sachs — will be the first woman to head the central bank. 

She takes over from Sahap Kavcioglu, who lowered rates even though central banks worldwide have done the opposite to fight inflation. Her appointment was published in the official gazette on Friday.

Under Kavcioglu's watch, the bank's policy rate was decreased to 8.5 per cent. It had been at 19 per cent in 2021.

The central bank "replaces its puppet banker", Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a note. 

She suggested that the new governor would likely return the bank toward a more conventional monetary policy that would require rate hikes.

The analyst also expects diminishing foreign exchange market interventions "which will first lead to a further lira depreciation to catch up a year-and-a-half coma — an expensive coma".

The bank is due to make a rate decision on June 22.

Erdogan, who was re-elected to a third term in office last month, already signalled a shift on Saturday when he unveiled a new cabinet with Mehmet Simsek, a former Merrill Lynch economist, as finance minister.

Simsek — who worked as finance minister and deputy prime minister in the past ruling AKP governments — is known to oppose Erdogan's unconventional policies of lowering interest rates to fight inflation.

Turkey's inflation rate dropped below 40 per cent in May for the first time in 16 months. Independent economists believe it is much higher, above 100 per cent.

Simsek welcomed the appointment as an "outstanding choice" while Turkish media have for days talked of Erkan as the "brilliant Turk" or "genius". 

"Her strong academic credentials and extensive experience in international financial markets mean that she is well positioned to guide Turkey through challenging economic times," Simsek tweeted. 

'Purged' central bank economists 

Analysts say investors are less interested in how talented the new economic team is than in their ability to resist pressure from Erdogan, who once called high rates "the mother and father of all evil".

"Simsek & Erkan will be judged on monetary policy moves, inflation and lira," emerging markets economist Timothy Ash said on Twitter. 

The Turkish currency was down around 1 per cent against the dollar on Friday, trading over 23 lira per dollar since Wednesday. 

One of Erkan's main challenges this year will be to repair the working atmosphere at the central bank, according to Erik Meyersson, chief emerging markets strategist.

"Too many bright economists and bureaucrats were purged, reassigned, demoted, ostracised, and there's a talent reserve that she should look to tap into. But would they want to return?" he tweeted. 

Erdogan in the past sacked central bank governors after disagreements over interest rate policy, in a move that unsettled investors. 

After taking office, Simsek said Turkey had "no choice but to return to rational ground" — a sign of turning away from the low-rate policy.

Following the lira's latest plunge, he stated his commitment to rules-based policymaking.

"While there are no short cuts or quick fixes, rest assured that our experience, knowledge & dedication will help us overcome potential impediments ahead," he said on Twitter. 

"Our immediate priority is to strengthen our team and design a credible programme."

US career 

Erkan was born in Turkey and graduated from Istanbul's top Bogazici University. She earned a PhD scholarship to Princeton.

She joined Goldman Sachs in 2005 as an associate and was named managing director in 2011.

She later worked at First Republic Bank in 2014 where she earned the titles of senior vice president, chief investment officer and co-chief risk officer.

She was seen as the heir apparent to the bank's founder and longtime CEO, Jim Herbert, but abruptly resigned in December 2021.

"It was time for a change and for a new challenge," Erkan told Bloomberg Television last year.

The bank was embroiled in the US banking crisis in March this year.

US financial authorities seized First Republic in May and sold it to JPMorgan Chase, hoping to bring an end to turmoil that brought down three other regional banks.

Erkan was appointed chief executive of Greystone in June 2022, but she resigned in December. 

The firm said at the time that her departure was "amicable" and "related to her decision to focus on new opportunities in the financial sector".

BEIJING — Chinese inflation came in flat again in May, official figures showed Friday, as the country's economy sputters owing to softening demand and falling exports, leading to calls for a rate cut and a bigger government stimulus.

The consumer price index (CPI) rose 0.2 per cent on-year, from 0.1 per cent in April, the National Bureau of Statistics (NBS), said.

The figure was in line with expectations of analysts polled by Bloomberg.

Beijing has kept interest rates low compared to other major economies, but the near-zero inflation highlights challenges faced by policymakers as they try to stimulate the economy.

Top economist and government adviser Liu Yuanchun on Thursday called for regulators to cut borrowing costs further to ease the financing burden of small and medium-sized private businesses.

Private companies' borrowing costs exceeded that of large state-owned enterprises, Liu said, according to Bloomberg News.

Large state-owned enterprises enjoyed loan rates lower than 1.8 per cent but many private firms had to pay nearly nine per cent, he said on the sidelines of the Lujiazui Forum in Shanghai.

"It'll be better if the rate cut comes as a part of a package of support policies," he said.

China's six largest state-owned commercial banks cut interest rates for savers on Thursday to boost spending, according to announcements on their websites, after being asked by the central bank.

The country's producer price index (PPI) — which measures prices paid by wholesalers — dropped a bigger-than-expected 4.6 per cent in May, from a 3.6 per cent decline in April, and the biggest drop since 2016. 

PPI has fallen for eight consecutive months because of sluggish domestic demand and lower commodity costs.

Other economic data released recently also signal weakness in the world's second-largest economy, despite the lifting of strict pandemic rules at the end of last year.

Exports sank in May for the first time since February, state media reported earlier in the week, breaking a two-month growth streak as a post-COVID rebound faded.

The Chinese economy is weighed down by a debt-laden property sector and a global economic slowdown. 

"The risk of deflation is still weighing on the economy," Zhiwei Zhang, chief economist at Pinpoint Asset Management, said.

"The government has not sent a clear signal on potential policy stimulus," he said, adding that the next round of policy reviews may come after July. 

Analysts from Capital Economics said: "We still think a tightening labour market will eventually put some upward pressure on inflation later this year."

LONDON — Britain's financial regulator on Thursday tightened rules over the promotion and selling of cryptocurrency as it seeks to protect consumers.

The Financial Conduct Authority (FCA) unveiled a package of measures for the industry, which has long faced criticism over the lack of oversight — and promises of high returns in a volatile marketplace.

Under the new rules, companies promoting crypto products or services in Britain must from October give a "clear warning" that customers could lose money in "high risk" investments.

Marketing firms must also introduce a cooling-off period for first-time crypto investors.

And the watchdog will also ban "refer a friend" bonuses that are designed to incentivise crypto investing.

"Our rules give people the time and the right risk warnings to make an informed choice," said Sheldon Mills, head of consumers and competition at the FCA.

The announcement comes after Britain introduced legislation earlier this year to bring crypto promotions under the scope of the FCA.

UK lawmakers are also demanding that crypto investments in Britain be regulated, in much the same way as the country's gambling industry.

Reacting to the FCA announcement, director of operations at industry group CryptoUK, Su Carpenter, said the new rules could prevent fresh entrants.

"There is a risk that this solution will both unfairly concentrate market power for those firms which are already authorised and potentially encourage unauthorised firms to operate from outside of the UK," Carpenter said.

That could in turn create "a competitive disadvantage for UK-based organisations and also potentially undermining consumer safeguards", she added in a statement.

The FCA clampdown follows moves toward tighter regulation in the United States.

The Securities and Exchange Commission on Tuesday sued crypto platform Coinbase, charging that the largest US digital currency trading platform made billions of dollars by "unlawfully facilitating the buying and selling of crypto asset securities".

The SEC has this week also unveiled charges against Coinbase peer Binance and its founder Changpeng Zhao for numerous alleged securities law violations.

The news follows the spectacular failure of crypto exchange giant FTX in November, stoking concern over a market dubbed by some critics as the "Wild West".

ISTANBUL — The Turkish lira sank to a new low against the dollar on Wednesday, more than a week after the reelection of President Recep Tayyip Erdogan.

The currency, which was propped up by the central bank before the presidential election, fell 5 per cent to 22.77 lira per dollar at around 0645 GMT.

Erdogan was sworn in on Saturday after winning a historic election runoff on May 28 and named a new cabinet appointing market-friendly politician Mehmet Simsek as finance minister. 

The former Merrill Lynch economist is known to oppose Erdogan's unconventional policies.

He served as finance minister between 2009 and 2015 and deputy prime minister in charge of the economy until 2018, before stepping down ahead of a series of lira crashes that year. 

Simsek said: "We have no choice but to return to rational ground" soon after he took office, a sign of shifting away from the unorthodox policy of lowering interest rates in order to fight inflation.

"Whoever won the election, the expectation was the lira had to go weaker, to a more competitive level," London-based emerging markets Economist Timothy Ash said in a note. 

Ash said the lira's fall showed the "impact" from Simsek pushing the central bank to have a "rational policy", which means a weaker currency that is competitive.

"We are seeing policy normalisation play out."

Central banks worldwide have been raising rates in efforts to combat inflation.

But Erdogan has long advocated low interest rates in a bid to stimulate growth. He once called high rates "the mother and father of all evil" promoted by a foreign "interest lobby".