Who can explain working under article 8 of the IMF

[dontlop]

I'm thinking its a decision Iraq can make only if it chooses that monetary policy

It's not something that they will eventually be under if they pay their bills

[dontlop]

I know who can explain it

I hope she puts it in her own words

Come on ten million

I know your the one who can explain it and you posted all the info but its hard for some like me to understand

Will this enable Iraq to float its currency and or rv the currency

Would article 8 help us with our desire to make money off the dinar ?

[dontlop]

http://www.easyenglish4u.com/imf-and-iraq

[dontlop]

More broadly, Directors emphasized that fostering growth in the private non oil sector requires improving the business environment, investing in infrastructure and social capital, reforming state owned enterprises, and enhancing public service delivery. Judicious use of the country’s oil wealth can help address these pressing challenges. Improving the authorities’ capacity to implement reforms will also be critical.

Just learned that Iraq is under what's called Article XIV and that with it, it carries the following limitations.

ARTICLE VIII AND ARTICLE XIV

Payments Restrictions

ARTICLES VIII AND XIV

There has been in recent years a substantial improvement in the balance of payments and the reserve positions of a number of Fund members which has led to important and widespread moves to the external convertibility of many currencies. Most international transactions are now carried on with convertible currencies, and many countries have progressed far with the removal of restrictions on payments. In consequence of these developments, it seems likely that a number of members of the Fund either have reached or are nearing a position in which they can consider the feasibility of formally accepting the obligations of Article VIII, Sections 2, 3, and 4. Previous decisions taken by the Fund, such as those on multiple currency practices, bilateral arrangements, discriminatory restrictions maintained for balance of payments purposes, and payments restrictions for security reasons, indicate the Fund’s attitude on these matters. The present decision has been adopted as an additional guide to members in pursuance of the purposes of the Fund as set forth in Article I of the Articles of Agreement.

1. Article VIII provides in Sections 2 and 3 that members shall not impose or engage in certain measures, namely restrictions on the making of payments and transfers for current international transactions, discriminatory currency arrangements, or multiple currency practices, without the approval of the Fund. The guiding principle in ascertaining whether a measure is a restriction on payments and transfers for current transactions under Article VIII, Section 2, is whether it involves a direct governmental limitation on the availability or use of exchange as such. Members in doubt as to whether any of their measures do or do not fall under Article VIII may wish to consult the Fund thereon.

2. In accordance with Article XIV, Section 3,1 members may at any time notify the Fund that they accept the obligations of Article VIII, Sections 2, 3, and 4, and no longer avail themselves of the transitional provisions of Article XIV. Before members give notice that they are accepting the obligations of Article VIII, Sections 2, 3, and 4, it would be desirable that, as far as possible, they eliminate measures which would require the approval of the Fund, and that they satisfy themselves that they are not likely to need recourse to such measures in the foreseeable future. If members, for balance of payments reasons, propose to maintain or introduce measures which require approval under Article VIII, the Fund will grant approval only where it is satisfied that the measures are necessary and that their use will be temporary while the member is seeking to eliminate the need for them. As regards measures requiring approval under Article VIII and maintained or introduced for nonbalance of payments reasons, the Fund believes that the use of exchange systems for nonbalance of payments reasons should be avoided to the greatest possible extent, and is prepared to consider with members the ways and means of achieving the elimination of such measures as soon as possible. Members having measures needing approval under Article VIII should find it useful to consult with the Fund before accepting the obligations of Article VIII, Sections 2, 3, and 4.

3. If members at any time maintain measures which are subject to Sections 2 and 3 of Article VIII, they shall consult with the Fund with respect to the further maintenance of such measures. Consultations with the Fund under Article VIII are not otherwise required or mandatory. However, the Fund is able to provide technical facilities and advice, and to this end, or as a means of exchanging views on monetary and financial developments, there is great merit in periodic discussions between the Fund and its members even though no questions arise involving action under Article VIII. Such discussions would be planned between the Fund and the member, including agreement on place and timing, and would ordinarily take place at intervals of about one year.

4. Fund members which are contracting parties to the GATT and which impose import restrictions for balance of payments reasons will facilitate the work of the Fund by continuing to send information concerning such restrictions to the Fund. This will enable the Fund and the member to join in an examination of the balance of payments situation in order to assist the Fund in its collaboration with the GATT. The Fund, by agreement with members which are not contracting parties to the GATT and which impose import restrictions for balance of payments reasons, will seek to obtain information relating to such restrictions.

Decision No. 1034-(60/27),

June 1, 1960

1 Ed. Note: Corresponds to Article XIV, Section 1 of the Articles of Agreement after the Second Amendment.

IMF Mission Concludes Article IV Discussions with Iraq

Press Release No. 13/87

March 21, 2013

****THIS HAS TO DO WITH ARTICLE IV****

An International Monetary Fund (IMF) mission, led by Mr. Carlo Sdralevich, met with an official Iraqi delegation headed by the Acting Minister of Finance, Dr. Ali Al Shukri, in Amman, Jordan, during March 2-12, 2013 to conduct the Article IV Consultation discussion. The IMF mission met with the Acting Minister of Finance, the Acting Governor of the Central Bank of Iraq (CBI), head of the Board of Supreme Audit, AbdulBasit Al Turki Said, and other Iraqi officials from the ministries of finance, planning, and oil, and representatives from the Central Bank and the Board of Supreme Audit. The team also met with representatives from the Iraqi banking and business community.

At the conclusion of the mission, Mr. Sdralevich made the following statement:

“Following the recent expiration of the Stand-By Arrangement with Iraq approved in 2010, the IMF is committed to continue close collaboration with Iraq to support its development and help the government improve the social conditions and employment opportunities of Iraqi citizens.

“Despite a difficult security and political environment, Iraq managed to maintain macroeconomic stability over the past two years. On the back of rising oil production and robust non-oil activity, economic growth has remained strong at about 8 percent in 2012. We expect activity to accelerate further to 9 percent in 2013, as oil production increases from just under 3 million barrels per day (mbpd) in 2012 to 3.3 mbpd in 2013. In 2012, inflation was contained at 6 percent, and we project it to decline slightly next year. On account of strong oil proceeds, CBI reserves reached US$70 billion at the end of 2012, while the Development Fund for Iraq (DFI) rose to US$18 billion.

“While we welcome the achievement of a budget surplus of about 4 percent of GDP in 2012, largely due higher-than expected oil revenues, the execution of the 2013 budget should be aligned with available financing and provide for the accumulation of adequate fiscal buffers in the DFI, which suggests to target a budget surplus in 2013. Public financial management should be strengthened, notably by phasing out off-budgetary spending practices and reliance on state-owned bank financing to support public enterprises. Approval of additional spending commitments during the fiscal year should also be avoided.

“Financial sector policies are improving, but more remains to be done. The CBI’s ongoing efforts to refine monetary policy instruments, strengthen banking supervision, and accelerate the restructuring of the banking system are crucial. In this respect, the recent steps to clean up the balance sheets of Rasheed and Rafidain in preparation for their restructuring and recapitalization are key. The CBI should also take measures to gradually liberalize the provision of foreign exchange through its auctions, with the objective of avoiding in future the turbulence experienced by the market in the past year.

“Iraq will need to address serious medium-term challenges in order to be able to create the conditions for high and sustainable growth that is necessary to improve the living standards of its people. The economy continues to suffer from severe structural weaknesses such as a small nonoil sector, high unemployment, public sector dominance, and a weak business environment. In this context, we discussed the role of economic policies in leveraging Iraq’s potential and creating an enabling environment.

“With regard to the fiscal sector, the budget must be managed carefully to maintain macroeconomic stability, meet Iraq’s large social and investment needs while continuing to accumulate buffers to address oil market volatility, and ensure medium-term fiscal sustainability. At the same time, Iraq needs to strengthen fiscal institutions and public financial management to make sure that the large oil revenues are used effectively and transparently.

“Developing a stronger financial sector development will require moving away from the current model in which weak state-owned banks dominate the financial sector and enjoy favorable treatment vis-a-vis private banks. A solid banking system that can support growth and employment will require the full financial and operational restructuring of state-owned banks and creating a level playing field for both private and public banks.

“Finally, while oil-growth is projected to remain high over the coming years, boosting non-oil private sector growth will need a long-term government strategy centered on improving the business environment and opening up opportunities for the private sector.” http://www.imf.org/external/np/sec/pr/2013/pr1387.htm

[skeetdog]

Thanks dontlop...Thought I'd give this a whirl and give you and over view. One does not just step into this matter without full understanding of all contents of rules, guide lines and laws their reference to amendments to different foundations in conjunction to the subject matter and expect to have clarification. With that being said ," come on ten million"....I'm thinking more on the lines that Iraq has to create a condition and maintain that condition to be eligible to be permitted to obtain a status or rating within chapter IIX...and this's just a long shot with vague understanding on trying to comprehend this confusion.... 

[dontlop]

Thanks

According to this part from above

It says its up to Iraq when it wants to move to article 8

Iraq is now under XIV

2. In accordance with Article XIV, Section 3,1 members may at any time notify the Fund that they accept the obligations of Article VIII, Sections 2, 3, and 4, and no longer avail themselves of the transitional provisions of Article XIV.

Read more: http://dinarvets.com/forums/index.php?/topic/180457-who-can-explain-working-under-article-8-of-the-imf/#ixzz357HEzy60

It's just an obligation that Iraq makes to pay its debts without restrictions

Meaning the external debts are paid before they eat breakfast or buy a cow or anything

The debts are paid first

If you have trade surpluses you have nothing to worry about

If you have trade deficits

You must pay the differance or borrow from the cbi by selling debt

Or bonds in other words

With interest of course or no one would buy your debt if ya didn't pay interest

Monetizing debt

In many countries the government has assigned exclusive power to issue or print its national currency to a central bank. The government treasury must pay off government debt either with money it already holds or by financing it by issuing new bonds which are sold to either the public directly or the central bank, in order to raise the funds required to repay bonds that have come due. The central bank may purchase government bonds by conducting an open market purchase, i.e. by increasing the monetary base through the money creation process. If government bonds that have come due are held by the central bank, the central bank will return any funds paid to it back to the treasury. Thus, the treasury may 'borrow' money without needing to repay it. This process of financing government spending is called 'monetizing the debt'.

Central banks are usually forbidden by law from purchasing debt directly from the government. For example, the Treaty on the Functioning of the European Union (article 123) expressly forbids EU central banks' direct purchase of debt of EU public bodies such as national governments. Their debt purchases have to be from the secondary markets. Monetizing debt is thus a two-step process where the government issues debt to finance its spending and the central bank purchases the debt, holding it until it comes due, and leaving the system with an increased supply of money.

Man this is too much

I better calm down

Me having dinar is not a debt of Iraqs

If I go to Iraq and cut some guys grass and he pays me 10,000 dinar

Iraq doesn't owe me anything

The debt was paid in dinar and I accepted the trade

Dinar is legal tender in Iraq

Go spend it

Now if you want a different currency for that you'll have to find a buyer

They are not obligated to exchange your dinar are they ?

If china comes over here with 2 trillion dollars are we obligated to give them two trillion dollars worth of Chinese yaun ?

The United States doesn't issue Chinese yaun

Just like the cbi doesn't issue dollars

So now what ?

Anyone tried to buy gold jewlery online from Iraq with cash ? Or buy anything online with dinar ?

In cash that is

Edited June 19, 2014 by dontlop

[skeetdog]

I always thought since I had and still possess my LOA from when I was in Iraq that that was my ticket of ownership.  I did purchase all my dinar in Iraq and Kuwait the exchange rate was too high when we started flying through Dubai, got mine at 460 per mill. There were no exchanges in Iraq just banks and Turks but in Kuwait there were several people that went back to the exchange outside the gates of ARIFJON when they got tight on money and exchanged their Iraqi dinar for Kuwaiti dinar and USD. To answer your question "Nope" haven't tried to exchange and or buy anything online with my dinar. As far as the US and the Yuan...we're not obligated, yet....Thanks for the update and brief education on this chapter 8 ordeal, I asked the question months ago on Adams Wednesday chat about this chapter 8 and he just kinda blew it off as having any bearing on the RV. Not sure when I asked but it should be in the archives somewhere...  hope we get and answer, I'll keep an eye on this, take care, Later

[dontlop]

Removing restrictions of payment means your currency will float and be exchangeable on the forex

And if all restrictions are removed banks can deal with it and they are guaranteed payment thru bis if necessary I believe

I'm going to look up the dong see what article they fall under

This is just how I see it

Ok yep they accepted article 8

I was wondering why they are listed for exchange at some banks

The government of Vietnam has notified the International Monetary Fund (IMF) that it has accepted the obligations of Article VIII, Sections 2, 3 and 4 of the IMF's Articles of Agreement, with effect from November 8, 2005.

https://www.imf.org/external/np/sec/pr/2006/pr0602.htm

Now I know

Once Iraq accepts article 8 we can go to banks and sell out no matter if they rv rd or what ever they do

In my opinion

We all know Vietnamese exchange rate is around 20 thousand to a dollar

So what are your options for where to sell your Vietnam Dong? You have several options. You could sell your Vietnam Dong to a bank or currency exchange if you can find one who deals in this currency. Though it's more common for banks and currency exchanges to deal with the Vietnam Dong than the Iraqi Dinar, it's still tough to find a bank or currency exchange who deals with the Dong. Bank or currency exchange buy in prices or rates will also tend to be less than that of dealers since banks generally aren't going to be able to re-sell the currency and are going to have to pay fees to sell it off to a broker or another bank. A dealer on the other hand will turn around and sell that currency for a profit to one of their Dong customers so they don't need to make as much money on the buy in and you will tend to get a better price or a better rate.

If you're unable to find a bank or currency exchange who deals in the Dong, or if you just prefer to go through a dealer for a better rate there's a number of dealers you can reach out to who buy in Vietnam Dong. The prices will generally be better than prices you will get from a bank. Just be sure to call around and shop around for the best price as most dealers don't post their buy in prices for Vietnam Dong.

[Butifldrm]

I'm thinking its a decision Iraq can make only if it chooses that monetary policy

It's not something that they will eventually be under if they pay their bills

dontlop, article VIII is not a punishment.  If Iraq wants to play the imf/international game, it would be to their advantage to become article VIII compliant.  The article IV consultation you posted earlier is just an example the imf sets to provide the best vehicle for Iraq to reach article VIII compliance. Article VIII compliance is important economically to support trade and the economic infrastructure of a country.  It guarantees to member trading countries the stability of a countries economic systems put in place.   Two of the main vehicles the imf has cited, to be in compliance are to maintain the 2% spread between the CBI rate and the market rate, and not place all their eggs in one basket.  The imf wants Iraq to grow in other aspects of their economy, for example the agricultural aspect.  Every sector of the Iraq economy that brings in revenue, will make Iraq less dependent on oil revenues.   As a business, coming into Iraq to build infrastructure it would be a huge challenge to budget,if this 2% spread was not maintained.  Say you were budgeting for your employees living expenses, food shelter etc. If the market rate were fluctuating all over the place, it could completely throw off your budget. Cost a business a lot of unbudgeted money  As we can see what's going on now, with the security issue and the possible threat of decreased oil supplies, The Dinar has suffered.  The Market rate went from 1210 to 1217.  I have always said Maliki is not an IMF guy.  Now he is going to learn a huge lesson.  Iraq is the second largest oil producer in OPEC.  The people of Iraq should have a much better life 11 years after the first government was formed.  Control, Corruption and Sectarian divide has been their demise.  Let's see now if the New Government will pass the laws broken, give the hard working Iraqi people what they deserve and enter Iraq into the International Game.

Edited June 19, 2014 by Butifldrm

[dontlop]

Trust me I'm hoping Iraq goes under article 8

Some people been saying Iraq has to be compliant before the IMF will move them into article 8

What I'm trying to get across is its up to Iraq to decide whether or not they want to be under article 8

I do understand it's not a punishment

It frees up its currency to be used externally

It removes restrictions made by the cbi or goi under article XIV

Right now they depend on bilateral agreements and things like that with other country's

I'd like to see them accept article. 8

Thanks dream

Edited June 19, 2014 by dontlop

[tenmillion]

The IMF has encouraged Iraq to move from Transitional Article XIV to Article VIII for several years. In order for Iraq to move to Article VIII, they must abide by the rules or "obligations" that the IMF requires for all Article VIII countries. At this point, Iraq cannot move to Art VIII because they have several restrictions on foreign currency exchange. 

 

So basically, the IMF wants to provide all IMF member countries with the assurance that when they trade with each other, invest in a country, they are all on the same playing field. That way foreign and domestic investors feel confident that they can move their money in and out of  foreign accounts without concern. 

 

Iraq has several restrictions that were outlined in the last Article IV report. (Iraq has an Article IV review yearly ~ the next one will be published approximately July - October 2014.) 

 

Now....the restrictions from last July's IMF Art IV meeting:  LINK

 

Iraq continues to avail itself of the transitional arrangements under Article XIV. Eight exchange restrictions (plus one exchange restriction maintained for national or international security) and one multiple currency practice (MCP) are subject to IMF jurisdiction and approval. The exchange restrictions are ~

 

(i) the limitation that corporates can purchase foreign exchange in the auction for import transactions only; 

 

(ii) limitation on the availability of foreign exchange cash for individuals (i.e., one request per month); 

 

(iii) maximum limits on the availability of foreign exchange cash in the auction for banks;

 

(iv) maximum limits on the availability of foreign exchange cash in the auction for money transfer companies and money exchange bureaus;

 

(v) the requirement to pay all obligations and debts to the government before proceeds of investments of investors, and salaries and other compensation of non-Iraqi employees may be transferred out of Iraq;

 

(vi) the requirement to submit a tax certificate and a letter of non-objection stating that the companies do not owe any taxes to the government before non-Iraqi companies may transfer proceeds of current international transactions out of the country;

 

(vii) the requirement that before non-Iraqis may transfer proceeds in excess of ID 15 million out of Iraq, the banks are required to give due consideration of legal obligations of these persons with respect to official entities, which must be settled before allowing any transfer; and 

 

(viii) an Iraqi balance owed to Jordan under an inoperative bilateral payments agreement. In addition, one exchange restriction maintained for security reasons should be notified to the IMF under the framework of Decision 144-52/51). The *MCP arises from the absence of a mechanism to ensure that the official exchange rate and the market exchange rate do not deviate by more than 2 percent.

(Iraq owes Jordan $1.3 billion)  *MCP = Multiple Currency Practices

 

All of these monetary restrictions {capital flows (investments) in and out of the country} impede the growth and development of the country. In order for Article VIII to be effective, Iraq will need to address their weaknesses within their financial/banking system (2 State-owned banks - audit and recapitalize) and develop their economy. Also....

 

I think one of Iraq's main concerns is money-laundering/terrorism, security issues, and that is what is keeping them from moving into Article VIII. (my opinion and it's been mentioned in other IMF docs) 

 

Right now Iraq's priority is SECURITY!  I hope this helped....I'm sure there are things I missed, but this is a complex topic!

 

IMF Article VIII ~  LINK

[sandfly]

THANKS

[dontlop]

Thanks ten yes its compex