Guest views are now limited to 12 pages. If you get an "Error" message, just sign in! If you need to create an account, click here.

Jump to content
  • CRYPTO REWARDS!

    Full endorsement on this opportunity - but it's limited, so get in while you can!

Latest Full IMF Report


fnbplanet
 Share

Recommended Posts

From the introduction/summary:         "The authorities are responding to the crisis with ambitious but necessary fiscal adjustment while maintaining their commitment to the exchange rate peg, which provides a key nominal anchor in a highly uncertain environment." 

http://www.imf.org/en/Publications/CR/Issues/2017/08/09/Iraq-2017-Article-IV-Consultation-and-Second-Review-under-the-Three-Year-Stand-by-45174?cid=em-COM-123-35751  

 

Change the rate, keep the peg!?

Edited by bkeiller
Add link
  • Upvote 3
Link to comment
Share on other sites

Peg is what the new RV/RI rate would be compared to, and they still think whatever it stays or becomes, it should be compared (pegged) to the US Dollar.  Good news.

 

I took this part of the report to say that they are recommending removal of the exchange restriction.  It seems that they are stating that one exchange rate restriction (and multi-currency practice) are in effect presently, and that the staff doesn't approve of it anymore.  Anyone disagree?

25 minutes ago, bkeiller said:

Change the rate, keep the peg!?

Yes!  They want it pegged, NOT floating.  They could be open to a "managed float" down the road.

 

BTW, I like the use of the word "accelerated".  

 

NOTE:  This is directly from the IMF release, but the way it reads,  it seems to have gone through a translator.

  • Upvote 10
Link to comment
Share on other sites

17 minutes ago, fnbplanet said:

Peg is what the new RV/RI rate would be compared to, and they still think whatever it stays or becomes, it should be compared (pegged) to the US Dollar.  Good news.

 

I took this part of the report to say that they are recommending removal of the exchange restriction.  It seems that they are stating that one exchange rate restriction (and multi-currency practice) are in effect presently, and that the staff doesn't approve of it anymore.  Anyone disagree?

Yes!  They want it pegged, NOT floating.  They could be open to a "managed float" down the road.

 

BTW, I like the use of the word "accelerated".  

 

NOTE:  This is directly from the IMF release, but the way it reads,  it seems to have gone through a translator.

 

that was imo best i can remember shabibi's original plan for the currency come out strong pegged to the dollar or basket of currencies the usd would be included in for a certain length of time not to fluctuate more than a small percentage during that time frame for stability .. cheers we wait  

  • Upvote 4
Link to comment
Share on other sites

Iraq : 2017 Article IV Consultation and Second Review under the Three-Year Stand-by Arrangement-and Requests for Waivers of Nonobservance and Applicability of Performance Criteria, and Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Iraq

Author/Editor:

International Monetary Fund. Middle East and Central Asia Dept.

Publication Date:

August 9, 2017

Electronic Access:

Free Full text (PDF file size is 2405 KB).Use the free Adobe Acrobat Reader to view this PDF file

Summary:

Iraq is an oil-dependent and state-dominated fragile economy that has been hit hard by the conflict with ISIS and the fall in oil prices. The conflict has hurt the economy through displacement and impoverishment of millions of people, and destruction of infrastructure and assets. The oil price decline has resulted in a massive reduction in budget revenue, pushing the fiscal deficit to an unsustainable level. The authorities are responding to the crisis with ambitious but necessary fiscal adjustment while maintaining their commitment to the exchange rate peg, which provides a key nominal anchor in a highly uncertain environment.

Series:

Country Report No. 17/251

  • Upvote 12
Link to comment
Share on other sites

19

ECONOMIC POLICIES TO ADDRESS THE CRISIS

A. Managing External Pressures

16. The peg to the U.S. dollar has provided a key nominal anchor in a highly uncertain

environment with policy capacity weakened by the conflict with ISIS. Per the latest External

Sector Assessment, the current account deficit was about 8 percent of GDP weaker than warranted

by fundamentals and desirable policy settings but that gap is projected to close over the medium

term as the programmed fiscal adjustment is implemented (¶9). However, the persisting, though

narrowing, spread between the official and parallel market exchange rates creates profit

opportunities for banks that crowd out credit to the economy.

Staff’s advice

17. Maintain the peg with the U.S. dollar. Accommodating external shocks through more

exchange rate flexibility is not advisable. While devaluation could aid fiscal adjustment—provided

the government could resist subsequent pressures to raise wages and other budget allocations in

dinar terms—it would risk exacerbating social tensions as it would trigger a spike in inflation since

most food and consumer items are imported. Moreover, devaluation would have little impact on

exports, which are almost exclusively oil and oil-related products. Therefore, fiscal consolidation is

the most appropriate tool to manage external pressure.

18. Simplify procedures to allocate foreign exchange. While, over the past years, authorities

have introduced more documentation requirements for access to the CBI foreign exchange window

mentioning concerns about anti-money laundering and countering the financing of terrorism

(AML/CFT), these measures have generated sizable parallel market premium that has fueled

speculative activity among banks and money exchange operators (¶9). Simplifying these procedures,

while properly implementing the AML/CFT standards, and gradually eliminating the remaining

exchange restriction to move towards acceptance of the obligations under Article VIII of the IMF’s

Articles of Agreement would help reduce the spread between the official and parallel market

exchange rates.

 

 

I've read most of this report and it seems they have much more to do

B/A

  • Upvote 6
Link to comment
Share on other sites

 

"Simplifying these procedures,

while properly implementing the AML/CFT standards, and gradually eliminating the remaining

exchange restriction to move towards acceptance of the obligations under Article VIII of the IMF’s

Articles of Agreement would help reduce the spread between the official and parallel market

exchange rates."

 

Gradually?????  How long is THAT gonna take?

Link to comment
Share on other sites

While there are definitely some negatives in that document, I am also seeing some positive nuggets sprinkled in there, too.

 

Cherry picking a few key sentences:

 

Quote

Measures to bolster financial sector stability include strengthening the legal framework of the Central Bank of Iraq, restructuring state-owned banks, and eliminating an exchange restriction and a multi-currency practice.

 

YEAH, baby!

 

Quote

(In percent, unless otherwise indicated)

Monetary indicators

Growth in reserve money  12.6    -9.6    -12.6    7.1    1.3    3.6    4.0    5.8    5.8    5.9

Growth in broad money     15.9    3.6     -9.0      7.2    4.1    4.9    4.0    6.5    7.1    8.3

 

That's 2013 - 2022 (projected). Lookin' good!

 

Quote

25. The government will gradually remove remaining exchange restrictions and a multiple currency practice (MCP) with a view to eliminating exchange rate distortions. Such a move towards acceptance of the obligations under Article VIII of the IMF’s Articles of Agreement will send a positive signal to the investor community that Iraq is committed to maintain an exchange system that is free of MCPs and restrictions for current international transactions and thus facilitate creation of a favorable business climate. As a first step, on October 16, 2016, the CBI made the weekly limits on the purchase of banknotes at the foreign currency auctions indicative, in the sense that any bank requiring additional cash for their clients’ legitimate travel expenses can obtain the required amount above these limits based on appropriate documentation. As a second step, the CBI issued clarifying implementing regulations, to remove the limitation on transfer of investment proceeds that gives rise to an exchange restriction (SB, Table 2).

 

Encouraging foreign exchange and international transactions sounds like a step in the right direction to me.

 

Quote

Exchange Arrangement Iraq’s de jure and de facto exchange rate arrangements are classified as a conventional peg arrangement. The Central Bank Law provides the Board of the CBI with power to formulate exchange rate policy. The CBI Board undertook a realignment of the peg from 1166 to 1182 dinar per USD on December 1, 2015, unifying the effective rates applicable to cash sales and transfers at 1190 including the central bank commission. The CBI stands ready to provide foreign exchange at the official exchange rate plus commissions for permissible transactions through its daily allocations, establishing a peg. However, because certain transactions are excluded from access to the CBI auctions, many transactions take place at parallel market exchange rates. Until March 2016, the CBI published the daily volume of the auction allocation on its website.

 

Iraq continues to avail itself of the transitional arrangements under Article XIV, Section 2 but no longer maintains any exchange restrictions or multiple currency practices subject to Article XIV, Section 2, and currently maintains one exchange restriction and one multiple currency practice (MCP) subject to Fund approval under Article VIII, Sections 2(a) and 3.

 

This is what looks really good to me. They are using the 1182 dinar rate pegged against USD to calculate exact amounts of assets vs. debts on all of their charts and official docs, and they are ready for foreign exchange. I don't take this to mean that the dinar is permanently pegged at 1182 -- only that it's the official figure they are using at this time to calculate the numbers for their charts and projections in this document and that IMF and Iraq will continue to use the USD as a benchmark for the value.

 

Full steam ahead on this voyage! 

 

:pirateship:

  • Upvote 6
Link to comment
Share on other sites

3 hours ago, bkeiller said:

From the introduction/summary:         "The authorities are responding to the crisis with ambitious but necessary fiscal adjustment while maintaining their commitment to the exchange rate peg, which provides a key nominal anchor in a highly uncertain environment." 

http://www.imf.org/en/Publications/CR/Issues/2017/08/09/Iraq-2017-Article-IV-Consultation-and-Second-Review-under-the-Three-Year-Stand-by-45174?cid=em-COM-123-35751  

 

Change the rate, keep the peg!?yes maintain and managed peg to the dollar and RV  the dinar!

 

  • Upvote 3
Link to comment
Share on other sites

RJ45 said:  "This is what looks really good to me. They are using the 1182 dinar rate pegged against USD to calculate exact amounts of assets vs. debts on all of their charts and official docs, and they are ready for foreign exchange. I don't take this to mean that the dinar is permanently pegged at 1182 -- only that it's the official figure they are using at this time to calculate the numbers for their charts and projections in this document and that IMF and Iraq will continue to use the USD as a benchmark for the value."

 

Hopefully, I'm wrong, but this sounds to me like what Kaperoni has been saying all along - that the dinar will come out at 1182 and GRADUALLY float up from there.   Please tell me I'm wrong.  We don't want to wait any longer.  It's been too long as it is.

 

Also, if it's pegged to the dollar, then it can only float up and not crash down.  Can this be right?

 

  • Upvote 1
  • Downvote 1
Link to comment
Share on other sites

Thanks Revbo

 

The link will take you to a Abadi press conference where he talks about economic status of Iraq and states Iraq has exited Chapter VII:

 

Abadi: "Iraq also exited from the UN's Chapter Seven"

 

 

Government of Iraq‏ @IraqiGovt 5h5 hours ago

PM @HaiderAlAbadi praises the development of Iraq's economy and encourages investment and diversification in his weekly press conference:

 

https://twitter.com/IraqiGovt/status/895272138881544192/video/1

  • Upvote 5
Link to comment
Share on other sites

2 hours ago, Floridian said:

 

"Simplifying these procedures,

while properly implementing the AML/CFT standards, and gradually eliminating the remaining

exchange restriction to move towards acceptance of the obligations under Article VIII of the IMF’s

Articles of Agreement would help reduce the spread between the official and parallel market

exchange rates."

 

Gradually?????  How long is THAT gonna take?

 

44 minutes ago, Floridian said:

Hopefully, I'm wrong, but this sounds to me like what Kaperoni has been saying all along - that the dinar will come out at 1182 and GRADUALLY float up from there.   Please tell me I'm wrong.  We don't want to wait any longer.  It's been too long as it is.

 

 

First, one must ascertain just what the goal (target) exchange rate is to begin with.  If the goal is $3.20 to $3.40ish (former glory), then gradually could mean $1.20 (enough to de-dollarize and end MultiCurrencyPractice) to start with, and THEN gradually rise to $3 plus.  

 

Tryin' to stay positive, and I positively could be happy with a plan like that!

  • Upvote 7
Link to comment
Share on other sites

2 minutes ago, fnbplanet said:

 

 

 

First, one must ascertain just what the goal (target) exchange rate is to begin with.  If the goal is $3.20 to $3.40ish (former glory), then gradually could mean $1.20 (enough to de-dollarize and end MultiCurrencyPractice) to start with, and THEN gradually rise to $3 plus.  

 

Tryin' to stay positive, and I positively could be happy with a plan like that!

I like POSITIVE :twothumbs:

  • Upvote 2
Link to comment
Share on other sites

1 minute ago, Floridian said:

Thanks, fnbplanet.  I'll try to look on the bright side.  Just so tired of all the ups and downs.

I hear ya.  Speaking of ups and downs, at the amusement park, the ups and downs look better after the roller coaster ride is over.  Hang in there.

  • Upvote 1
Link to comment
Share on other sites

36 minutes ago, Botzwana said:

Revbo is not even in this thread.  You feeling ok Carello?

 

I brought the info over from another site. In Dinarland, we give credit where credit is due and appreciate it. You're welcome, Botzwana.

 

And it's Carrello.

 

 

Edited by Carrello
  • Upvote 3
  • Downvote 1
Link to comment
Share on other sites

1 hour ago, Floridian said:

Hopefully, I'm wrong, but this sounds to me like what Kaperoni has been saying all along - that the dinar will come out at 1182 and GRADUALLY float up from there.   Please tell me I'm wrong.  We don't want to wait any longer.  It's been too long as it is.

 

Also, if it's pegged to the dollar, then it can only float up and not crash down.  Can this be right?

 

 

First off, disclaimer: I don't have a crystal ball -- only my wits and so-so skill of deduction. :P

 

It has been a long time, but this investment is a waiting game. Keep in mind Iraq has not only been nearly destroyed by the Hussein regime, they've actively been at war against terrorists who have been destroying roads, buildings, power plants, etc. They have little basic infrastructure. For many of their people, things like electricity and clean water are currently a luxury, not a right. They only JUST got Isis out of Mosul; the war isn't over yet.

 

I can guarantee you that once they manage to flush ISIS out, stabilize the country, and finish rebuilding, the dinar will be a heck of a lot stronger than it is now. However, that's a long way in the future, and until then, we can only hope that they will RV and return some value and spending power to the currency for their people to be able to afford the things they need and improve their basic living conditions--not just so we can take advantage of the windfall.

 

I want to see an RV as badly as anyone, but I don't want to instill false hopes, either. I picked out the good, and brushed over the bad. If I concentrate too much on the bad, I could easily talk myself into thinking I just bought a bunch of great kindling for a bonfire. 

 

My current belief is that our patience will be rewarded. It's difficult to put a finger on how much of a reward we're looking at given the current clues, but as I mentioned above, I take it as a good sign that Iraq is A - definitely continuing to value against the USD, and use the figures given in the IMF doc to calculate what is owed -- not have those numbers fluctuate with the value of the dinar; B - giving us confirmation that they are thisclose to going international with their currency (FOREX, anyone?); and C - have an actual plan to get out of debt and are not just planning to mooch off the IMF and loans forever.

 

What that doc tells us is that they have audited their accounts, know exactly what they owe and what their assets are, down to the last USD, and have a plan in place to get out of debt. Things are on shaky ground because of the amount of work they still have to do and they had setbacks due to ISIS, but they are moving forward on their plans, even if they are falling shy of the goals the IMF set for them.

 

All in all, I take it as a positive sign that they are speaking so strongly about going international and investments from other countries, and are pegged against the dollar/removing other currencies off their streets. All the little things that add up to another step closer to what we want -- an RV.

 

Will it play out the way Kaperoni says? I don't have a crystal ball. Will it be the way @fnbplanet suggests? I don't have a crystal ball.

 

Will it happen at all?

 

Again, no crystal ball, but I think so. And I also think, given more time, the value of the dinar will only rise, as their people and cities will from the ashes.

 

My :twocents:.

  • Upvote 3
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.