Let's analyze these doc's together...

[Who_Dat_Gurl]

The IMF has a section in the Iraq Country Report OCT 2010 that refers back to the Feb. 2010 Letter of Intent Report that I find interesting. I am just looking over docs and would like an input of what you think. What I have pointed out in a couple of paragraphs may not mean much, but I thought it was interesting.

Both docs have already been posted on the forum but I am adding them both to this posting for conversation sake and comparison.

Feb 8, 2010 Letter of Intent document

Page 5, paragraphs 5 and 6

5. The Central Bank of Iraq (CBI) has been successful in keeping inflation under

control, by managing the exchange rate and by keeping the policy interest rate positive in real

terms. When inflationary pressures emerged in 2008, the CBI stepped up the rate of

appreciation of the dinar vis-à-vis the U.S. dollar (to about ½ percent per month until late

2008), which also helped counter dollarization. As a result, headline inflation fell to

6.8 percent by end-2008. Inflation remained well below the target of 6 percent in 2009, with

prices falling by 4½ percent, mainly because of a further decline in fuel prices. Food price

inflation has picked up more recently, however, and core inflation (excluding fuel and

transportation) ended 2009 a 6 percent, down from 12 percent at end-2008.

6. With headline and core inflation low, the exchange rate has been stable since the

beginning of 2009. The policy interest rate has been reduced gradually to 7 percent. Net

international reserves increased to $50.2 billion at end-2008, but have fallen to $44 billion

at end-2009, reflecting the drawdown of the government’s deposits with the CBI.

http://www.imf.org/external/np/loi/2010/irq/020810.pdf

Oct 2010 IMF Iraq Country Report

page 8-9 paragraphs 10-17

10. Growth is likely to be significantly lower in 2010 given the lower oil production

volumes so far. Even with an increase in oil production in the second half of 2010, exports

may not exceed 1.92 mbpd on average this year. As a result, and with non-oil GDP expected

to continue to recover slowly as security conditions improve, overall real GDP growth is

expected to reach only 2½ percent in 2010, before picking up in 2011 when the international

oil companies’ activities are expected to yield an increase in oil production.

11. The 2010 budget deficit is projected to be smaller than programmed. Based on

current WEO price projections, adjusted for the quality differential between the WEO basket

and Iraqi oil, and assuming a modest increase in export volumes in the remainder of the year, oil

revenues in 2010 are projected to be somewhat higher than projected under the program. Thus,

assuming full execution of the capital budget, the budget deficit could be limited to about

14 percent of GDP, instead of 19 percent of GDP anticipated under the program.

12. The authorities see a continued need for the Fund’s financial support, however, and

request the second disbursement of SDR 475 million. They want to be able to maintain a

financial buffer as spending is expected to ramp up in the second half of 2010, while economic

uncertainties remain high. In the same vein, the authorities are also considering whether to use

last year’s SDR allocation to finance the 2010 budget or to keep this as a buffer for 2011. The

World Bank disbursed $250 million in budget support under its first Development Policy Loan

(DPL). Discussions on a second DPL are expected to start once a new government has taken

office.

13. The authorities agree on the need to reduce the budget deficit in 2011 to below

10 percent of GDP as a step to returning to a sustainable fiscal position. The 2011

budget circular, which allowed for further increases in security and social spending and a

large increase in capital spending, was, however, based on relatively optimistic assumptions

for oil export volumes and prices. With more conservative assumptions, the budget deficit would

increase to almost 15 percent of GDP. Staff urged the authorities to use conservative

assumptions for oil exports and prices in preparing the 2011 budget and to aim for a more

modest increase in the capital budget given continuing capacity constraints, while making

every effort to contain current spending, to ensure that the budget deficit in 2011 would be

limited to about 8 percent of GDP.

14. The CBI will continue to aim at keeping inflation low, predominantly through

the continuation of its exchange rate policy. The exchange rate remains the CBI’s main

policy instrument, given the very low level of financial intermediation.

B. Structural Reforms

Program Safeguards

15. The external audits of the CBI’s 2008 and 2009 financial statements were

completed, as well as a special audit of the CBI’s net international reserves as of end-

December 2009. The 2009 management letter has yet to be finalized, however. The audits

confirmed the monetary data submitted by the CBI to the IMF. The CBI did not contract a

special audit of its end-2009 net domestic assets position, however, since it believed the relevant

balance sheet items were already sufficiently covered by the regular audit of its 2009 accounts.

16. Going forward, the CBI has agreed to have an external auditor conduct special

audits of its net international reserves and also of its net domestic assets as of end-June 2010

(a new structural benchmark for end-October 2010). The NDA audit will also include a review

of the operations of the Memorandum of Understanding between the CBI and the Ministry of

Finance with regard to IMF disbursements and debt service obligations and the operational

controls over government accounts held at the CBI.

17. An update safeguards assessment of the CBI completed in June found that

significant safeguards risks remain at the CBI. These include heavily qualified external

audit opinions, deficiencies in the control framework and concerns with operational controls,

and delays in the completion of external audits and publication of financial statements.

Mitigating measures had already been incorporated in the Stand-By Arrangement, but

additional measures were recommended to help further mitigate remaining safeguards risks.

These included co-sourcing the internal audit function, expanding NIR and NDA reviews at

test dates, and establishing an independent audit committee. The authorities agreed with the

recommendations. Thus, contracting a multi-year co-sourcing agreement with a reputable

accounting firm is a new structural benchmark for end-December 2010. In addition, the CBI

Board already took a decision to transform the Internal Control Committee into an Audit

Committee that will be headed by one of the CBI’s deputy governors, but otherwise will

consist of a majority of non-executive members. This committee is to be effective in its new

format and with a terms of reference in line with Fund staff’s recommendations no later than

end-October 2010 (another new structural benchmark).

http://www.imf.org/external/pubs/ft/scr/2010/cr10316.pdf

IMF posted March 1,2010

Against this background, the authorities have designed an economic program for 2010–11 that aims to maintain macroeconomic stability during the period of political transition (parliamentary elections are scheduled for early March 2010) and deepen structural reforms, particularly in the areas of public financial management, the financial system, and oil sector transparency. In support of this program, the authorities have requested a new Stand-By Arrangement from the IMF in the amount of SDR 2,376.8 million (about $3.6 billion). This amount, together with disbursements from the World Bank under a Development Policy Loan and support from some donors, is expected to cover the financing gap for 2010–11. An important objective of the authorities’ fiscal program is to contain current spending in order to gradually reduce the budget deficit and make room for additional investment. Specifically, current spending in both 2010 and 2011 will be kept broadly unchanged in nominal terms at 2009 levels. At the same time, given the urgent need to improve infrastructure and basic public service delivery, a significant increase in capital spending is planned for 2010, following an underexecution of the 2009 capital budget due to administrative capacity constraints associated with security incidents that affected the Ministry of Finance towards the end of the year. Monetary and exchange rate policies will continue to aim at keeping inflation low in 2010 and 2011.

http://www.imf.org/external/np/sec/pn/2010/pn1034.htm

I keep hearing from the gurus that this HAS NO OTHER CHOICE but to RV. Why?? As seen in these different docs and other articles, there seems to be no problem with the way Iraq is handling things now at the current rate level. Continuing to keep inflation low and stable on their own, why would this NEED to RV. I am not a guru, and am still learning and that is why I am asking. Can't the IQD just grow in value on it's own through oil reserves as it has been and with increasing or decreasing their exchange rate a little bit as it has been doing?

[RichNick123]

Who_Dat_Gurl,

Help me out with this mathematical problem. Thank you in advance.

"Even with an increase in oil production in the second half of 2010, exports

may not exceed 1.92 mbpd on average this year".

1,920,000 barrels a day at an average of 70 USD = 134,400,000 a day.

It costs on average $2 USD a barrel to get it above ground. Subtract $3,840,000 from $134,400,000=$130,560,000 a day.

Reports have said that Iraq gets to keep 90% of the profit for the government. This is $117,504,000 a day

Now give a 30 day average per month this = $3,525,120,000 a month.

Multiply this by 12 months it = $42,301,440,000

Given this amount of 42 trillion a year lets cut it in half. $21,150,720,000

We have heard there are as many as 25 trillion Dinar circulating worldwide.

Given a yearly income of 21,150,720,000 and dividing it by the 25 trillion dinar it would give a value of $0.8460288

That is not far off of the LOPPING of the THREE ZEROES on the current exchange! .00089 without the 3 Zeroes would be .890!

This is my best guesstimate of what the RV will bring. Any and all math geniuses and economic gurus are welcome to help little ole me try and get a hold on what to possibly expect!

[Dinerry]

True..

But, an RV is waaaaaaaaaaaaaaaaaaaaaaaaaaaay MORE FUNNN!!

[RichNick123]

Who_Dat_Gurl,

Help me out with this mathematical problem. Thank you in advance.

"Even with an increase in oil production in the second half of 2010, exports

may not exceed 1.92 mbpd on average this year".

1,920,000 barrels a day at an average of 70 USD = 134,400,000 a day.

It costs on average $2 USD a barrel to get it above ground. Subtract $3,840,000 from $134,400,000=$130,560,000 a day.

Reports have said that Iraq gets to keep 90% of the profit for the government. This is $117,504,000 a day

Now give a 30 day average per month this = $3,525,120,000 a month.

Multiply this by 12 months it = $42,301,440,000

Given this amount of 42 trillion a year lets cut it in half. $21,150,720,000

We have heard there are as many as 25 trillion Dinar circulating worldwide.

Given a yearly income of 21,150,720,000 and dividing it by the 25 trillion dinar it would give a value of $0.8460288

That is not far off of the LOPPING of the THREE ZEROES on the current exchange! .00089 without the 3 Zeroes would be .890!

This is my best guesstimate of what the RV will bring. Any and all math geniuses and economic gurus are welcome to help little ole me try and get a hold on what to possibly expect!

In my sleep loss state I forgot to add additional zeroes for the 25 trillion! Never mind It only works out to .00169 with that equation! that comes out to about 1600,00 per million, not much higher than where we are! I will go to bed and do better tomorrow, I promise!

[Who_Dat_Gurl]

Who_Dat_Gurl,

Help me out with this mathematical problem. Thank you in advance.

"Even with an increase in oil production in the second half of 2010, exports

may not exceed 1.92 mbpd on average this year".

1,920,000 barrels a day at an average of 70 USD = 134,400,000 a day.

It costs on average $2 USD a barrel to get it above ground. Subtract $3,840,000 from $134,400,000=$130,560,000 a day.

Reports have said that Iraq gets to keep 90% of the profit for the government. This is $117,504,000 a day

Now give a 30 day average per month this = $3,525,120,000 a month.

Multiply this by 12 months it = $42,301,440,000

Given this amount of 42 trillion a year lets cut it in half. $21,150,720,000

We have heard there are as many as 25 trillion Dinar circulating worldwide.

Given a yearly income of 21,150,720,000 and dividing it by the 25 trillion dinar it would give a value of $0.8460288

That is not far off of the LOPPING of the THREE ZEROES on the current exchange! .00089 without the 3 Zeroes would be .890!

This is my best guesstimate of what the RV will bring. Any and all math geniuses and economic gurus are welcome to help little ole me try and get a hold on what to possibly expect!

Math is my poor subject, but your math seems to be correct, if the figures are correct. (Not meaning in a bad way) So if this is correct, do you think that from what you are showing here that the exchange rate would go up over time?

Where did you get your numbers? From this forum?

Some outdated numbers, adjust upwards

Reservoir characteristics (such as pressure) and physical characteristics of the crude oil are important factors that affect the cost of producing oil. Because these characteristics vary substantially among different geographic locations, the cost of producing oil also varies substantially.

In 2006, average production costs (or lifting costs - the cost to bring a barrel of oil to the surface) ranged from

* about $4 per barrel (excluding taxes) in Africa

* to about $8.30 per barrel in Canada;

* the average for the U.S. was $6.83/barrel (an increase of 23% over the $5.56/barrel cost in 2005).

Besides the direct costs associated with removing the oil from the ground, substantial costs are incurred to explore for and develop oil fields (called finding costs), and these also vary substantially by region. Averaged over 2004, 2005 and 2006, finding costs ranged from about $5.26/barrel in the Middle East1 to $63.71/barrel for U.S. offshore. While technological advances in finding and producing oil have made it possible to bring oil to the surface from more and more remote reservoirs at ever increasing depths, such as in the deepwater Gulf of Mexico, the total finding and lifting costs have increased sharply in recent years.

...

Oil Break-Even Prices

Nation US$/Barrel

Bahrain 40

Kuwait 17

Saudi Arabia 30

U.A.E. 25

Oman 40

Qatar 30

Canada's oil sands 33

These (and your) numbers do not include transportation costs and probably other costs.

You are asking some good questions. Nobody has yet to explain the effects messing with the exchange rate would have on the CBI's stated mission. The exchange rate is at the foundation of the CBI's tools to control the Iraqi economy. Another topic that nobody will touch on lately is how money will end up in your pocket.

Thanks for your contribution! I am told I ask good ?'s, but sometimes do not get the answer I am looking for. Maybe because I do not understand everything clearly. I definately agree that Iraq controls the economy, and obviously, IMF, ect. are pleased with the results, over all, from what I have been reading. So, that is why I am concerned. Why would they need or want to change anything, at least now anyways? Does anyone else have something more they can contribute?

[Who_Dat_Gurl]

My answer to your question would be that you are correct that the CBI is doing a good job with Iraq's economy and the latest IMF report shows that they are quite pleased with the results also. "Why would they want to change anything?" you ask. I would think they wouldn't want to change their course of action. Through minor manipulations of factors such as money supply, interest rates, International reserve levels, EXCHANGE RATES, bank reserve levels and such, they have maintained stable and probably sustainable economic growth and stable inflation rates.

Others would disagree with this and feel that the CBI can just change the exchange rate over a thousand fold and it wouldn't matter. Those who believe this have yet to explain how Iraq could possibly meet the demand of the IQD being cashed in, since ultimately, the CBI holds the final liability for all IQD.

Thank you again for replying. I wanted to hear that I and a handful of others were not alone in believing this. Factual articles and supporting documentation reveal this. I have just posted another document I found from Nov 2004 by a Dr. Merza. He worked for the UN as an Economists and Social Affairs. It explains it all right there and verifies what we are saying.

[Guest Ratatap]

Something to keep in mind is that if the war was paid for before we even began (By plan) or will be when this is all done (by plan) then to reach the money we have spent on the war would mean that we have to have an RV above the .86 .

To even come close to paying of the war, considering what we SUPPOSABLY have in treasury (Refer back to one of my earlier posts at: http://dinarvets.com...ederal-reserve/ ) it does need to be above .86. I am not saying that the Dinar is worth more but I hope it is more like $3 and above. If Kuwait is worth that much with less oil - land and resources, you have to think Iraq has to come in there abouts.

So this leaves one to have to crunch those numbers (War cost and Treasury holdings) to see what pays for the war but again how can you crunch numbers when there is NOWHERE that states that treasury even has Dinar or what treasury has on deposit in Iraqi Dinar.

GO RV !!!!!!!

[davrr007]

Thank you again for replying. I wanted to hear that I and a handful of others were not alone in believing this. Factual articles and supporting documentation reveal this. I have just posted another document I found from Nov 2004 by a Dr. Merza. He worked for the UN as an Economists and Social Affairs. It explains it all right there and verifies what we are saying.

Who_Dat_Gurl -- appreciate your questions and efforts... here's a good read from Groovgal --- http://groovgalsblog.wordpress.com/2010/07/25/groovgals-speculative-theory-on-future-values-of-the-iqd/

check it out --- i found it to be a good read

[FOUNDIT]

OK i can see the points here but i think you fail to understand the real motivator here.....GREED,POWER, and FALSE PRIDE. I mean we are talking politicians here right. Besides the fact that they need their money to be worth something to be a traded currency: they also have big, and soon to be huge bills. So far they have been sheltered by chapter seven with much debt forgiven.Soon they will be out of chapter seven and the handouts will dry up.These people constantly try to one up their neighbor as well.Case and point the oil reserves boosted by 24% in IRAQ which put them above IRAN. So not to be outdone IRAN boosted their oil reserves three days later so they would be above IRAQ. This is how they think with everything. INCLUDING THEIR CURRENCY. Will they RV you bet ya...and they will try to eventually lead in value.It will not surprise me to see a high RV.

[Who_Dat_Gurl]

OK i can see the points here but i think you fail to understand the real motivator here.....GREED,POWER, and FALSE PRIDE. I mean we are talking politicians here right. Besides the fact that they need their money to be worth something to be a traded currency: they also have big, and soon to be huge bills. So far they have been sheltered by chapter seven with much debt forgiven.Soon they will be out of chapter seven and the handouts will dry up.These people constantly try to one up their neighbor as well.Case and point the oil reserves boosted by 24% in IRAQ which put them above IRAN. So not to be outdone IRAN boosted their oil reserves three days later so they would be above IRAQ. This is how they think with everything. INCLUDING THEIR CURRENCY. Will they RV you bet ya...and they will try to eventually lead in value.It will not surprise me to see a high RV.

You are correct, debt forgiven, will be stated #1 in oil reserves, still in control of their country. But, i do not agree regarding the handouts. The IMF has set aside "standby" money. They have already used $250 million of it, and have asked again for another $250 million. ( I did not go back and check to make sure the amts. are correct). They seem to keep getting what they want. As you can see from Rick Nick's math figures above, they are making a chit load of money, with relieved debt and considered one of the riches countries in the world. This is not counting what lies ahead when they announce more oil reserves. So, we agree on most of it. I did not say they would not RV, I stated it will take longer than what keeps getting posted on the different sites, including this one. They are just starting to show, what we consider normal strength.

Finally a person with a rational mind.....I have felt the same thoughts. I have Dinar and I NEED IT TO RV now!! but as I take in ALL the information about an RV it has become clear...at least to me that there doesn't have to be an RV on the DINAR any time soon. The CIB is indepentant from the GOI and can RV with or without a Government in Place...AS FRANK HAS STATED (for all you FRANK Worshippers) which means it works BOTH ways. THE CIB could RV with out a GOI in place as long as there is a vailid plan in place to have one seated in the future AND even when the GOI is formed that doesn't automatically imply that an RV must take place. I know to many of the hypmotized out there this is a unacceptable outcome .....but it is possible. That doesn't mean the IQD will never RV...only that it is very possible it could be months and yes...even years before it occures. Truth is a *****.... many out there just cannot or will not stand for this as they have been seduced by well meaning people who get caught up with their EMOTIONs and don't have the safistication it takes to ride out LONG term world events.

Great minds think alike!

Ok, before I get bashed for that comment, I was teasing. We are just on the same page. It really can be found in everything you read. If people would take the time to actually read the articles and not depend on just a few, they could see the whole picture and not just the ones they want to see. Believe me, I would love for this to happen, my family could use this, but I am not letting my emotions- as you stated, get caught up in what I want now.

Edited October 21, 2010 by Who_Dat_Gurl

[gman51]

Who_Dat_Gurl,

Help me out with this mathematical problem. Thank you in advance.

"Even with an increase in oil production in the second half of 2010, exports

may not exceed 1.92 mbpd on average this year".

1,920,000 barrels a day at an average of 70 USD = 134,400,000 a day.

It costs on average $2 USD a barrel to get it above ground. Subtract $3,840,000 from $134,400,000=$130,560,000 a day.

Reports have said that Iraq gets to keep 90% of the profit for the government. This is $117,504,000 a day

Now give a 30 day average per month this = $3,525,120,000 a month.

Multiply this by 12 months it = $42,301,440,000

Given this amount of 42 trillion a year lets cut it in half. $21,150,720,000

We have heard there are as many as 25 trillion Dinar circulating worldwide.

Given a yearly income of 21,150,720,000 and dividing it by the 25 trillion dinar it would give a value of $0.8460288

That is not far off of the LOPPING of the THREE ZEROES on the current exchange! .00089 without the 3 Zeroes would be .890!

This is my best guesstimate of what the RV will bring. Any and all math geniuses and economic gurus are welcome to help little ole me try and get a hold on what to possibly expect!

Thats 42 billion a year, not trillion

[Who_Dat_Gurl]

davrr,

'

Thanks for the blog link. It was a goo read. I was not able to get to the other "rebuttle" links in there yet, but I will.

Edited October 22, 2010 by Who_Dat_Gurl

[Who_Dat_Gurl]

wanted to put out there what I posted back in Oct. 2010. I still believe that this is going to be a slower process than what many others keep stating. Not saying IQD will not increase, but will be a slower process than everyone thinks. IMO>

[NatMannDU]

I totally agree as well as want to say thanks for the info back in Oct, I just sighted it as part of what I would recommend for new folks, cause it has helped me understand we are waiting for the turtle to cross the finish line