BWO Addresses IMF Post from Last Night

[nointel]

BWO Addresses IMF Post from Last Night IMF: CBI Country Report June 15th, 2011

Good morning! Just thought I’d comment on the IMF report, “Financial Sector”, which was posted on DDT, late last night. Link to Post Referred To

It was a good find. My complements to whoever found and posted it. While I hope the report IS referring to an RV of the IQD by June 30th, the report actually reads “revalue the remaining foreign currency denominated balance sheets items…” as an Iraqi banking sector action to be completed by June 30. When taken in the context of what’s being addressed in this section of the report, this could mean (and – to my way of thinking – probably does) mean, simply what it states, i.e. a write-down of bad debt of loans made in foreign currencies, which are still showing on the Radidain and Rasheed balance sheets.

If that’s correct, the language doesn’t mean an RV of the Iraqi currency. Banks write down and write off bad debt, periodically, as housecleaning measures. Take in point the USA’s own action in that regard (and, due its sheer scale, the self-serving nonsense on the part of US banking execs and its terrible consequences for the economies of the world). Fortunately, the housecleaning in Iraq’s banking sector won’t likely be to this scale. In any case, the way I read the IMF’s reports; this section references a revaluation of bad debt held on the balance sheets at the Rafidain and Rasheed banks. Don’t get me wrong, I’m hoping that the IMF is obtusely suggesting this action on the part of the two banks means an overall RV of the IQD by June 30th. That’s just not the way I read this report. IMO, we need to remove our filters, when we see reports like this, and take them for exactly what they say. We have way too much rate/date noise in the “system”, already. To use something like this to back up our rate/date projections isn’t helpful to anyone. If it will happen by June 30, we’ll know soon enough, anyway.

The only thing I notice in this piece, which might indirectly reference the RV of the IQD by June 30 is the stated purpose of the action to be performed by the CBI with the help of Ernst & Young. Namely, “deal with all legacy external liabilites taking into account the government’s actions int he context of Iraq’s external debt restructuring.” Now, that sounds like an action on the part of the CBI to quantify exposure of the DFI to legal actions from foreign parties. If that’s what it means, the clock is ticking for them. Unless there’s something I’ve missed, that protection goes away on June 30 in the absence of Iraq’s exit from Chapter 7 and thier actions – whatever that might be – to protect these funds. I’ll defer to others on this one, like you, Breitling, and others, who likely understand the significance of Iraq’s exit from Chapter 7 (if that’s the connection) and its significance to the protection the DFI funds, post June 30. Further, I’ve never seen a convincing argument regarding the requirement for an RV, before exit from Chapter 7 will be approved by the UN. Admittedly, I’m no expert on this, but have spent a bit of time trying to understand “next steps”.

My thoughts…

BlueWingedOlive

[dinarx2]

The DFI funds are being transfered to a US account under the protection of the US treasury. So in reality they are still safe until the US decides to remove the protection. All of the fozen funds will be depositied in the same account and they have set up a 5% account to pay Kuwait. The Iraqis really had no choice as we are the only ones that could protect their money. They signed a deal with the US to pay off 400 million in claims in exchange for the protection.

[debratzz]

Blue winged olive.....new guru?

On a serious note, was a good read.

Thanks for the post.

[zaborniake]

This isn't even new news! This is from the IMF's March 2011 country report on Iraq. A bit behind the curve on this one, BWO.