Iraq: Letter of Intent,to the IMF

[zantac]

I

I know its dated February 8, 2010 but its pointed more to 2010-2011 projections.

Its a lot to read so get your beer out of the fridge first

I have highlighted in red the bits I like best

Link

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

International Monetary Fund

Iraq and the IMF

Press Release:

IMF Executive Board

Approves US$3.6

Billion Stand-By

Arrangement for Iraq

February 24, 2010

Country’s Policy

Intentions Documents

E-Mail Notification

Subscribe or Modify

your subscription

Iraq: Letter of Intent, Memorandum of Economic and Financial

Policies, and Technical Memorandum of Understanding

February 8, 2010

The following item is a Letter of Intent of the government of Iraq, which

describes the policies that Iraq intends to implement in the context of its request

for financial support from the IMF. The document, which is the property of Iraq,

is being made available on the IMF website by agreement with the member as a

service to users of the IMF website.

LETTER OF INTENT

February 8, 2010

Mr. Dominique Strauss-Kahn

Managing Director

International Monetary Fund

700 19th Street, N.W.

Washington, D.C. 20431

Dear Mr. Strauss-Kahn:

In the past few years, despite a very difficult security situation, Iraq’s economic performance

strengthened considerably owing to improved macroeconomic management and a favorable

external environment that lasted until mid-2008. These improvements also reflected the

assistance we received from the international community, including from external creditors

and the International Monetary Fund (IMF). Growth accelerated, inflation was reduced to

single digits, and fiscal and external sustainability improved substantially. Since 2004, we

have successfully completed three economic programs supported by the IMF, with our last

Stand-By Arrangement (SBA) ending in March 2009.

Already at the time of the last SBA review it became evident that the external environment

was deteriorating rapidly due to the sharp drop in international oil prices and the onset of a

slowdown in the global economy. As the proceeds from oil exports account for the bulk of

Iraq’s export receipts and government revenue, the decline in oil prices has posed

considerable challenges to our internal and external stability. During 2009, we have been

able to absorb much of the adverse impact of these external shocks by using the financial

buffers we built up in recent years. However, unless oil prices increase markedly, we would

be forced to constrain government spending in 2010 and 2011, at a time when our

developmental and security-related needs remain high. A fiscal contraction would hurt the

economy and undermine our hard-won macroeconomic stability, and could also contribute to

a deterioration of the security situation.

To address these challenges, we have developed the attached economic program for 2010–

2011. Our program aims to manage the effects on the Iraqi economy of the lower oil prices

and the slowdown in global economic activity. The program focuses on keeping inflation

low, increasing growth by boosting oil production, and ensuring fiscal sustainability. While

our main focus is on macroeconomic policies, we are also accelerating the pace of structural

reforms, especially to improve public financial management and develop the financial sector.

To support our efforts, and based on the economic program and the specific targets set out in

Tables 1 and 2 attached to this letter, we request a 2-year Stand-By Arrangement from the

IMF in the amount of SDR 2,376.8 million (approximately $3.8 billion), equivalent to

200 percent of Iraq’s quota, to help cover our balance of payments needs.

2

Given the large uncertainties and the high volatility of international oil prices, our projections

and the government’s budget for 2010 are conservatively based on an average price of

$62.5 per barrel for Iraqi oil. In the event that our oil export revenues turn out to be higher

than projected, we plan to save half of the additional revenues to rebuild our financial

buffers, while using the other half to finance additional investment to improve the delivery of

basic public services. Moreover, if by the time of the first or second program review futures

markets indicate that we will be able to obtain, on average, an oil price equal to or higher

than $73 per barrel for our exports in 2010, we intend to treat the SBA as precautionary,

given that we would no longer expect to have a financing need, provided that our oil export

volume (projected at 2.1 million barrels per day) is sustained (this issue will be examined in

detail at the time of each program review discussion). Vice versa, should oil export receipts

fall below our assumptions, we will reduce spending by half of the revenue shortfall and

cover the remaining gap by further using our financial buffers and seeking additional external

support, including from the IMF. If the revenue shortfall turns out to be sizable, or if the

reserve position of the CBI weakens below program targets in between test dates, we will

consult on the policy response with IMF staff.

In the same vein, we intend to treat the SBA as precautionary if it is expected that the 2010

investment budget will not be fully executed. Disbursements of capital spending in 2009 fell

short of budgeted amounts, due in part to severe disruptions of administrative capacity as a

result of the bombings of the Ministry of Finance in August and December. Investment

remains a key priority, however, as underscored also by the Council of Representatives’

provision of additional investment spending at the time of approval of the 2010 budget. The

2010 capital budget would imply a large increase over last year’s estimated investment

outturn. In order to ensure that the disruptions of administrative capacity do not lead to poor

quality implementation, we are working hard to rebuild and expand capacity, including by

restoring information systems and strengthening project approval processes. With these

efforts, we will aim to execute the full envelope for the year. If capacity issues cannot be

fully addressed, however, investment could again fall short of budgeted amounts. Therefore,

at the time of the second review we will reach understandings with IMF staff on the expected

rate of execution of the 2010 investment budget. If the rate of execution is expected to be less

than 93 percent, we intend to treat the SBA also as precautionary.

We understand that the requested SBA will be subject to semi-annual reviews, semi-annual

performance criteria, and structural benchmarks, as set out in the attached Tables 1 and 2,

and described in more detail in the attached Technical Memorandum of Understanding

(TMU). In this regard, we understand that the completion of the first review under the

SBA—expected to take place on or after May 31, 2010—will require observance of the

quantitative performance criteria for end-March 2010 specified in Table 1, and that

completion of the second review—expected to take place on or after August 31, 2010—will

require observance of the quantitative performance criteria for end-June 2010.

3

We believe that the policies set forth in our economic program are adequate to achieve our

objectives but are prepared to take additional measures if necessary. We will consult with the

IMF on the adoption of these measures and in advance of any revision to the policies

contained in our economic program, in accordance with IMF policies on such consultation.

The Iraqi government and the Central Bank of Iraq will continue to provide the IMF with the

necessary information for assessing progress in implementing our program, as specified in

the attached TMU, and will maintain a close policy dialogue with IMF staff. We authorize

the IMF to publish the Letter of Intent and its attachments, as well as the related staff report,

on the IMF’s website following consideration of our request by the IMF’s Executive Board.

Sincerely yours,

//s// //s//

Mr. Baqir S. Jabr Al-Zubaydi Dr. Sinan Al-Shabibi

Minister of Finance of Iraq Governor

Central Bank of Iraq

4

IRAQ: MEMORANDUM OF ECONOMIC AND FINANCIAL POLICIES FOR 2010–11

February 8, 2010

I. INTRODUCTION

1. Since 2004, Iraq has successfully completed three economic reform programs

supported by the International Monetary Fund (IMF): one under the Emergency Post Conflict

Assistance (EPCA) facility and two (precautionary) Stand-By Arrangements (SBA). During

this period, we have made considerable progress under very difficult circumstances,

including a very challenging security situation. We have successfully reduced inflation,

showed fiscal discipline, and started rebuilding our economic institutions. These

achievements have helped us to obtain generous debt relief from Paris Club and other

creditors that has substantially improved our external position.

2. These hard-won gains of recent years could be undermined, however, by the large

drop in oil prices from their peak levels of mid-2008. After reaching a high in July 2008,

when Iraqi crude oil sold for $124 per barrel, prices fell to a low of $35 per barrel in January

2009, before slowly recovering to a level of around $68 per barrel in the second half of 2009.

The average export price in 2009 was $57 per barrel, well below the average export price of

$92 per barrel in 2008. In addition, due to dire infrastructural problems, the volume of oil

exports in the early months of the year fell below 2008 levels (to 1.75 million barrels per day

(mbpd) in the first five months). We have been working to address these problems and oil

exports reached 2 mbpd towards the end of 2009, bringing the average for the year to

1.88 mbpd.

3. As the proceeds from oil exports account for the bulk of our total export receipts,

and for the majority of government revenues, the lower oil prices are posing considerable

challenges to our internal and external economic stability. To maintain macroeconomic

stability, and foster growth and employment, we have adopted an economic adjustment

program for 2010–11 for which we seek support from the IMF under a new 2-year SBA,

as well as financial assistance from other international institutions and countries. This

Memorandum of Economic and Financial Policies (MEFP) describes our economic

objectives and policies, including the structural reforms, for this period.

II. RECENT ECONOMIC DEVELOPMENTS

4. Due to the temporary drop in oil production, real GDP growth is estimated to have

slowed to 4 percent in 2009, from almost 10 percent in 2008. There are indications, however,

that the improved security situation has supported economic activity in the non-oil sector.

The Central Organization for Statistics and Information Technology (COSIT) estimates that

real non-oil GDP grew by about 5½ percent in 2008 and that the pace of non-oil growth

remained broadly unchanged in 2009.

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.

7. The government budget recorded a modest surplus in 2008 (almost 2 percent of

GDP). Higher-than-expected oil revenues enabled us to increase spending. Particularly, and

due also to our efforts to improve the execution of the investment budget, we were able to

substantially increase capital expenditures in 2008, compared to the previous year.

8. With the drop in oil prices, the external current account is estimated to have moved

into a large deficit in 2009, of over 20 percent of GDP. And as oil revenues account for the

bulk of government revenues, the government budget is also estimated to have shifted into a

large deficit, of over 20 percent of GDP in 2009. The 2009 budget, which was adopted at a

time when sharply lower oil revenues were expected, was designed to support as much as

possible our investment program and the required security outlays, while containing current

spending. The bombings of the Ministry of Finance in August and December of 2009,

however, affected our capacity to fully execute our investment plans. Despite this, the 2009

budget deficit, based on preliminary financing data, is estimated to have recorded a deficit of

over ID 17 trillion. This deficit was covered mainly by drawing down the balances the

government had built up in the CBI and by mobilizing domestic resources through the

issuance of Treasury bills.

III. ECONOMIC AND FINANCIAL POLICIES IN 2010-2011

9. The global financial and economic crisis has worsened Iraq’s external outlook

significantly. The drop in oil export revenues, in particular, presents a major challenge in

view of the country’s vast reconstruction and rehabilitation spending needs. Under these

circumstances, we are determined to strengthen fiscal discipline to better ensure that the

reduced public resources are used more efficiently and that fiscal sustainability is preserved.

We have adopted a budget for 2010 that aims to further reduce non-priority current outlays

and align the investment budget with our national priorities and implementation capacity. We

seek to reduce the government’s budget deficits during 2010 and 2011, with a view to

returning to a budget surplus in 2012. In addition, we aim to maintain a financial buffer in

our accounts equivalent to three months of government wages. Appropriate management of

the exchange rate and an interest rate policy aimed at keeping the policy interest rate positive

in real terms will continue to be the main instruments to keeping inflation under control. We

will also continue to advance our structural reform agenda, with a particular emphasis on

public financial management and financial sector reforms.

10. By continuing to pursue sound economic policies and intensifying our efforts to boost

oil production, we aim to accelerate the pace of economic growth. We seek to increase

average crude oil production and exports to 3.1 mbpd and 2.5 mbpd, respectively, by 2012.

As a result, we expect real GDP growth to increase to almost 7 percent in 2010 and to

7½-8 percent in 2011 and 2012. We will also strive to keep inflation at around 5–6 percent in

the coming years.

11. As oil prices and production are expected to rise in the medium term, the current

account deficit would narrow markedly in the coming years. Since the decline in oil revenues

is expected to be temporary until oil production reaches higher levels, we intend to secure

adequate financing to avoid a major economic contraction. The international reserves held in

the CBI and the DFI (excluding the FMS subaccount) are expected to fall from $55 billion at

end-2009 to $46 billion by end-2010 and to broadly remain at that level in 2011 and 2012,

before increasing in the following years.

A. Fiscal Policy and Reform

The 2010 Budget

12. The 2010 budget aims to contain current spending to limit the deficit and create room

for higher investment outlays. In this regard, we will contain the government’s wage bill by

refraining from granting new wage increases following the large catch-up in salaries in 2008,

which carried over into 2009. In addition, net hiring of non-security personnel in 2010 will

be limited to new teachers and doctors, until the civil service census is completed. To limit

spending related to the in-kind Public Distribution System (PDS), we have initiated reforms

that seek to target the benefits of the program to the poorest Iraqis. In addition, we have

decided to reduce the number and volume of goods distributed under the PDS system. At the

same time, we plan to expand the new targeted cash transfer system. Generalized transfers, in

particular to state-owned enterprises, will be sharply reduced, reflecting the improved

financial position of many of these enterprises. As a result of these measures, current

spending will be curtailed at ID 62.9 trillion (in the IMF’s presentation). By doing so, we

have been able to increase the capital budget to ID 25.8 trillion, with an increased focus on

electricity, water and sanitation, health, and agriculture. The overall deficit will be limited to

ID 17.9 trillion (19 percent of GDP) in 2010 (in the IMF’s presentation).

13. As our financing needs in 2010 will still be substantial, we will step up our efforts to

mobilize domestic financing through the Treasury bill market. To that end, we will conduct

regular auctions, and refrain from cancellations, while allowing interest rates to be

determined by the market. This will have additional benefits by determining a benchmark

interest rate, while the development of a secondary market for treasury bills will allow banks

to improve their liquidity management. Also, to ensure integrity in our payment and budget

systems, we will refrain from accumulating domestic expenditure arrears.

Public Financial Management Reforms

14. Over the next two years, we intend to transform and modernize our public financial

management (PFM) system. Late last year, in consultation with the IMF and the World Bank,

we adopted a three-year action plan that identified priority measures in the areas of budget

preparation, execution and reporting; cash management; public procurement; and the

accounting framework. Specifically:

 To improve budget preparation, we will clearly define priorities, set ceilings in the

budget circular for current and investment spending in line with a sustainable

medium-term budget strategy, and develop overall sector strategies;

 To strengthen reporting and cash management, we will require spending units to

submit reports on all spending including investment, advances, and letters of credit no

later than two months after the end of each month, and to reconcile these amounts

with the cash balances at the beginning and end of the reporting period. Cash releases

will be approved only after the Ministry of Finance has reviewed the report from

three months before. This will reduce the idle balances in spending units’ accounts to

the minimum required to ensure the continuity of government operations. Moreover,

by end-March 2010 we will review all accounts in the banking system that are

classified as central government accounts and reconcile them with Treasury records,

and will return any idle balances received from the budget to the central Treasury.

 With regard to advances, we will review the outstanding stock of advances to identify

those that are recoverable and set a time schedule for their recovery and for writing

off irrecoverable advances based on appropriate authorization at a high level. We will

prepare a detailed report to document the results of the review. The basis on which

debts have been classified as recoverable or irrecoverable, and actions taken to

recover doubtful amounts before recommending that they be written-off will be

clearly specified.

 To strengthen internal audit and control systems, we will reexamine our internal

policies and procedures at the Ministry of Finance, as well as the accounting systems,

processes and internal controls used by the accounting department; and review the

internal controls of the largest spending units' operating systems. To strengthen the

quality of our investment agenda and accelerate the reconstruction of Iraq’s

infrastructure, we will ask the Board Supreme Audit (BSA) to review the largest

investment projects financed with 2008 budget allocations. This audit report will

evaluate (i) the criteria for approving capital investment projects: whether a costbenefit

analysis was carried out; (ii) the procurement process: whether it conformed

to international standards of transparency and competitiveness; and (iii) the project

management process: whether the projects were delivered on time and within budget.

The report will provide recommendations that could be used in the following

budgeting process to enhance the agenda on public investment.

 We will also undertake an assessment of the functionality of the Iraq Financial

Management Information System (IFMIS) developed with the assistance of USAID,

and make the changes required to ensure that this system is fully operational (with the

inclusion of a commitment control system and the ability to produce regular

comprehensive reports in line with best practices) in 2011.

 We will continue to submit to the BSA and to the Council of Representatives the final

accounts for each fiscal year no later than September 30 of the following year. The

BSA has already completed the audit of the final accounts of the federal budget for

2005-06, and it is reviewing the 2007 and 2008 accounts.

15. To avoid the obstacles we encountered last year in data collection for the census of

public service employees, we have narrowed the coverage to include all central government

employees that work outside of security related areas. We will make all efforts to have the

census completed by September 30, 2010. After completion of the census, we will move

swiftly to eliminate ghost workers and adopt an action plan aimed at developing a

computerized human resource database and a computerized payroll system, as a first step

toward comprehensive civil service reform. In parallel, the BSA has begun a project to verify

the personnel records in the line ministries in order to clean up the existing payroll.

Tax Reforms

16. We have made some progress in developing a medium-term tax reform strategy

with the objective of streamlining the tax system, broadening and diversifying the tax base,

and increasing revenue collection. As a first step, in 2008 we introduced a mobile phone tax.

Looking ahead, we plan to introduce a sales tax in the coming years as a precursor for a

value-added tax, and are also considering to reduce the number of income tax brackets. We

will seek technical assistance from the IMF and other international partners to support our tax

reform efforts. We will urge the Council of Representatives to adopt the new customs law

that will establish a transparent and efficient tariff system with fewer exemptions.

Oil Sector Reforms

17. We will ensure that no direct subsidy is placed on any fuel products in Iraq.

Moreover, to continue reducing the size of indirect subsidies to fuel products and counter

smuggling, we intend to increase official fuel prices as needed especially if the world prices

of fuel products continue to rise. To eliminate hidden subsidies, we will ensure that all

ministries, governmental agencies, and public enterprises will pay domestic market prices for

fuel purchases starting in 2011. We will also work on developing a periodic adjustment

mechanism for fuel prices, with technical assistance from the IMF.

18. We want to ensure that the oil sector is fully transparent, to strengthen accountability

of how this important natural resource is used. To that end, we intend to maintain a single

account for oil export proceeds and will continue to adhere to the strict transparency and

accountability rules that currently govern the DFI. The accounts will continue to be subject

to an independent external audit, and to the oversight of the Committee of Financial Experts

(COFE). If it were no longer possible to maintain the DFI, we will establish another single

account for oil export proceeds governed by similar principles.

19. We will complete the process of becoming a candidate for membership in the

Extractive Industries Transparency Initiative (EITI) by March 31, 2010. In addition to regular

publication of our production, refining, and export data, we have appointed a senior

government official, the Inspector General of the Ministry of Oil, to take the lead on EITI

implementation. The next steps will be to convene a stakeholders’ meeting (government,

private sector and civil society) and put together a fully costed plan including measurable

targets, a timetable for implementation, and an assessment of capacity constraints.

20. To promote transparency and good governance in the oil sector, we plan to complete

the metering project in the next years. The metering system for the Al-Basra oil export

terminal has already been installed. Moreover, the second phase of the installation of

metering systems for the northern pipeline and the Khor Al-Amyah export terminal has

started, and will be completed by early 2010. Also, in addition to a computerized tracking

system for oil transports by road and rail that is already up and running, a comprehensive

domestic custody-transfer metering system is being installed and will be completed by

December 31, 2010. These mechanisms would enable a full review of the domestic oil sector

allowing the flows of oil and oil products to be fully reconciled with the financial flows

between the state-owned oil companies and the budget by mid-2011. In this connection, we

also plan to conduct a streamlined Public Expenditure Review of the oil ministry, together

with the ministries of health, education, and public works, with the assistance of the World

Bank.

B. Monetary and Exchange Rate Policies and Financial Sector Reform

21. The CBI will continue to be independent in the pursuit of its policy objectives. The

CBI’s monetary and exchange rate policies will continue to be aimed at keeping inflation

under control and safeguarding international reserves. The subdued inflationary pressures

thus far in 2009 have helped to maintain the nominal exchange rate stable since the

beginning of the year and to reduce the policy interest rate to 7 percent. The policy interest

rate will be kept positive in real terms (measured against core inflation) to signal the CBI’s

firm commitment to maintain a low rate of inflation. We are accelerating plans to roll out a

new CPI based on more recent household expenditure data, which will help us better monitor

underlying inflationary dynamics.

22. The banking sector is in urgent need of reform to foster financial intermediation and

enable banks to contribute to the development of a strong private sector. With the help of the

World Bank and other international agencies, we have developed a banking sector reform

strategy. The first important step will be to finalize the restructuring of Rafidain and Rasheed

banks, based on their completed financial and operational audits. In this regard, the foreign

liabilities incurred by Rafidain and Rasheed on behalf of the previous regime and the large

suspense accounts will need be removed from these banks’ balance sheets. We aim to

complete the restructuring of the balance sheets of Rafidain and Rasheed by June 30, 2010.

Once their balance sheets are cleaned up and restructured, based on the decision already

made by the Economic Committee, the capital of Rafidain and Rasheed will be raised to

ID500 billion and ID400 billion, respectively. We are also strengthening their internal audit

capacity, developing legal arrangements within the banks, and working towards providing

missing data identified in the audit reports. The BSA has also completed the financial and

operational audits for the three specialized state-owned banks and has proposed an individual

strategy for each bank that was discussed by the Restructuring Oversight Committee (ROC).

The three banks have set up a restructuring committee which includes BSA members to

implement the recommendations from the proposed strategy.

23. We have already completed the set of prudential regulations for commercial banks,

including those related to minimum capital requirements, liquidity risk, and anti-money

laundering, and will begin the implementation phase. Work on the relevant reporting tables

for the banks will be completed soon in consultation with the IMF and other technical

assistance providers. At the same time, we are stepping up our efforts to further

develop banking supervision practices in line with best international practices. In addition,

we have asked the commercial banks to conform their accounting norms to the International

Financial Reporting Standards (IFRS) as per end-2009, and to prepare a set of financial

soundness indicators that could be used to monitor sectoral developments. Finally, to assess

the progress made so far, we are in the process of conducting a full assessment of the banking

supervision department.

24. We have continued to strengthen the accounting and reporting framework of the CBI.

The CBI has appointed a control committee, which is responsible for developing control

procedures and manuals, and for establishing a modern internal audit function with the

assistance of external consultants. An internal audit committee including two external experts

has also been set up to make recommendations regarding external and internal audit

oversight, financial reporting, and controls. We have also reconciled almost all the

outstanding suspense accounts and CBI intra-branch accounts, and established a register of

outstanding off-balance sheet commitments (letters of credit and guarantees). As of July, the

CBI has completed the process of becoming IFRS compliant.

25. We are committed to strengthening the management of international reserves by

moving ahead with the implementation of new reserves management guidelines that were

adopted in early August 2008. We will follow the guidelines to diversify currency

composition and establish appropriate duration and credit risk, build capacity for risk

analysis, and work towards establishing a dealing room. We will also provide by end-March

2010 more frequent reports to the CBI board based on the investment criteria established in

the guidelines.

26. To improve the functioning of foreign exchange auctions, we plan to develop

organized exchange markets outside the central bank, including an interbank foreign

exchange market. Our aim is to establish a forward market in Iraqi dinars in the near future.

IV. PROGRAM SAFEGUARDS AND MONITORING, DEBT AND DATA ISSUES

27. As we intend to use the domestic counterpart of IMF resources for budget support,

the CBI—which is the fiscal agent—will request the IMF to disburse the resources directly

into a government account at the CBI. To provide adequate safeguards to the Fund, the

following steps have been taken or will be implemented in the near future:

 A Memorandum of Understanding has been agreed between the CBI and the

government clarifying responsibilities with regard to servicing the debt to the Fund;

 An external auditor has been appointed to undertake the audit of the CBI 2008

financial statements in accordance with International Standards on Auditing, and the

audit is expected to be completed by March 31, 2010. The external auditor has

already completed a verification of the CBI’s international reserves as of June 30,

2009. The completion of the external audit will allow the IMF to prepare a safeguards

assessment update by the time of the first review of the program. In the future, the

CBI will work with the Ministry of Finance to adopt a timely selection and rotation

policy for future audits; an auditor for the 2009 CBI financial statements will be

appointed before end-February 2010.

 The external auditor will also undertake special audits of (i) CBI Net International

Reserves, and a full count of gold and foreign reserves held at the Central Bank, as

of June 30, 2009, (ii) CBI data reported to the Fund, including, but not limited to, Net

International Reserves, Net Domestic Assets, credit to government and a full count

of gold and foreign reserves held at the Central Bank, as of December 31, 2009,

December 31, 2010, December 31, 2011 and the other test dates during the SBA, and

(iii) procedures surrounding government accounts at the CBI.

28. Progress has been made in moving toward accepting the obligations of Article VIII,

Sections 2(a), 3, and 4, of the IMF’s Articles of Agreement. We have worked with IMF staff

to complete the review of exchange laws and regulations and are considering measures to

remove the identified exchange restrictions on current international transactions. We remain

committed to avoid imposing any restrictions on the making of payments and transfers for

current international transactions or introducing any multiple currency practices.

29. We will continue our efforts to resolve outstanding external claims under terms that

are consistent with the 2004 Paris Club agreement. Bilateral agreements with twelve non-

Paris Club official creditors have already been signed and are being implemented. We will

continue our best efforts to reach bilateral debt agreements with the remaining non-Paris

Club creditors. The United Arab Emirates has announced the full cancellation of Iraq’s debt,

and implementation of a bilateral agreement with Greece is awaiting the Greek parliament’s

approval. Debt reconciliation was completed with Morocco, Egypt, and China, and we hope

to sign the relevant debt agreements, particularly with China with which an agreement has

been initialed recently, in the near future. Regarding private creditors, most of the

commercial debt has been restructured, and is serviced as agreed. We also expect that the

proceeds of the liquidation of the London branch of Rafidain Bank will be distributed to

private claim holders by the end of the year.

30. Efforts will continue to improve Iraq’s statistical database. Monetary and balance

of payments data are now being published in the IMF’s International Financial Statistics

regularly, and annual national accounts data have been compiled up to 2007. We will focus

on improving the quality of these annual data developing quarterly national accounts data.

While the Socio-Economic Household Survey has been completed, the updating of the CPI

weights has been delayed for a number of reasons. A new national coordinator for the

General Data Dissemination System (GDDS) has been appointed. As of December 15, we

are participating in the GDDS and comprehensive information on Iraq’s statistical production

and dissemination practices now appears on the IMF’s Dissemination Standards Bulletin

Board.

31. Performance under the program will be monitored through twice-yearly reviews, with

macroeconomic policy performance monitored through semi-annual quantitative

performance criteria (Table 1). Progress in structural reforms will be monitored through

benchmarks (Table 2).

[sogoddess]

I like your red bits.

[ThePhantomRider]

It's a good read. In fact, I posted it this morning as well....

[patriotic party girl]

Wow this is a great post Thanks . BTW I LOVE THE RED PARTS THE MOST OF ALL HAHA

[rwharnden]

Zantac as always you post great stuff! Thanks!

[lechesuerte]

Thanks for the post zantac. This has some good stuff, especially when you combine it with the reading of the actual articles of agreement. GO RV !

[xxxgator]

Thanks for the post .I also liked item 29 right under yousecond red letter paragraph.peace

[speedy1]

pull the trigger already lets get this party started

[doc9574]

Thanks zantac appreciate your work and efforts

[30 at 50]

Zantac tahnks you are one cool dude..and a hard worker too.

blessings

[zantac]

Latest update on September 18th 2010

link

http://www.imf.org/external/np/loi/2010/irq/091810.pdf

[michelneedsRV]

Zantac I observed that sometimes u're negative with the whole dinar issue and sometimes u're too positive with it. I'm unable to understand ur character LOL..

Pls tell me if it'll revalue or not.. I'm waiting patiently for an RV.

Michel