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Dinar Updates Sunday PM Chat 9-11-16 Part 3 of 3
rcookie says():ANYONE REMEMBERING ANY OF THESE DERERMINANTS OF EXCHANGE RATES........WE WENT OVER ON CALL...
rcookie says():Real exchange rate shock: A one-off real depreciation of 10 percent (20 percent nominal depreciation) would alter the debt to GDP path only slightly since GDP would be inflated when the shock hits, raising GDP in line with the debt stock.
rcookie says():Combined shock: A combination of these shocks would increase debt to 117 percent of GDP in 2018 and 2019. Debt would decline to 113 percent of GDP towards the end of the forecast horizon.
rcookie says():Stress tests in the external DSA suggest that Iraq’s external debt ratio is also sensitive to shocks. While the path of Iraq’s external debt would rise only marginally in response to an interest rate or a growth shock, a current account shock and a real depreciation would result in a substantial increase in external debt.
rcookie says():Non-interest current account shock: An increase in the current account excluding interest payments by half a standard deviation in each year from 2017 onwards would raise external debt to 56 percent of GDP in 2018 before edging down to 50 percent in 2021.
rcookie says():Real depreciation shock: A one-time real depreciation of 30 percent in 2016 would raise external debt to 80 percent of GDP in 2017 but the debt ratio would decline to 53 percent by 2021.
rcookie says():Combined shock: A one quarter standard deviation shock to the real interest rate, the growth rate and the current account would raise the external debt ratio to 54 percent in 2018 and43 percent towards the end of the projection period.
rcookie says():WE ARE AT THE SUPER BOWL DU............BE CAREFUL YOU ARE NOT CAUGHT WATCHING THE CHEERLEADERS OR JANET JACKSON AT THE HALFTIME SHOW........THERE IS A REALLY GOOD GAME GOING ON OUT THERE.....DONT BLINK.....
Soonergirlie says to rcookie()::D(y)
jtank says():play by play
jimplants says():all ,i want is an end to MCP and its time to head to the bank and i do not care for ms jackson
Soonergirlie says to jtank():sometimes I feel like rcookie is calling a blow by blow boxing match for us (H)
rcookie says():LASTLY....SOMEONE MESSAGED ME ABOUT THE FISCAL REFORMS......DONT LISTEN TO GURUS...SPECULATE AND FUMBLE WITH RIDICULOUS OPINIONS THAT ARENT EVEN CLOSE.....AGAIN THEY HAVE SPELLED THEM OUT FOR YOU COMPLETELY...
rcookie says():B. Fiscal Policy
rcookie says():15. In order to maintain macroeconomic stability and achieve debt sustainability, the government commits to pursue its fiscal consolidation efforts to bring spending in line with available resources in 2016–19.
This will require: (i) a sizable reduction in the adjusted non-oil primary balance5 (PC, Table 3), of about 11 percent of non-oil GDP (ID 4.3 trillion, or $3.6 billion) over 2016–19; and (ii) a large increase in mostly domestic but also external financing over the short run that will remain compatible with debt sustainability in the medium run.
rcookie says():16. In order to minimize the impact of the fiscal consolidation on the population, the government will protect social spending, i.e. spending on health, education, and transfers in support of the social safety net, the internally displaced and the refugees (IT, Table 3)
rcookie says():17. In order to strengthen debt sustainability, the government will renew discussion with Iraq’s non-Paris Club (PC) creditors towards which it still has unresolved external arrears in an amount of$41 billion that were accumulated under the pre-2003 Saddam regime.
Those arrears make most of the total stock of the external debt stock, which amounted to $67 billion at end-2015. Negotiations with these creditors will continue to seek implementation of debt relief on the same terms as with the PC creditors, i.e. an 80 percent net-present-value reduction.
The government will also examine with the PC the possibility of requesting a net-present-value neutral rescheduling of the remaining claims of PC creditors.
rcookie says():18. To ease the cash constraint in 2017, the authorities have agreed with the government of Kuwait on a further postponement of the payment of overdue war reparations to Kuwait amounting to$4.6 billion (ID 5.4 trillion or 4.3 percent of non-oil GDP) beyond 2017.
rcookie says():19. In order to facilitate implementation of the budget sharing arrangement between the Federal Government and the KRG, the Federal Government is looking into improving its modalities.
In this regard, both parties are considering netting out the KRG oil receipts, which the KRG plans to have audited by international audit companies starting on July 1st, 2016, with the budgetary transfers to which the KRG would be eligible under the budget sharing arrangement. In the meantime, the performance criterion on the non-oil primary balance (¶32) for the Federal Government will have an adjuster in case the budget sharing agreement with the KRG is not implemented (TMU, ¶14).
rcookie says():AND HERE IS THE OUTLINE FOR THEIR FISCAL PROGRAM IN 2016.......
rcookie says():20. In 2016, the government commits to contain the non-oil primary deficit to no more thanID 65.2 trillion (53.3 percent of non-oil GDP), compared to ID 76.7 trillion (56.3 percent of non-oil GDP) in the 2016 budget. ‘
The Council of Ministers’ approval and circulation to parliament of a quarterly budget execution report that presents the projection of revenue and expenditure for the remainder of 2016 reflecting this change, an explanation of variations from the 2016 budget, and the measures to be taken to ensure that the budget execution remains in line with the macroeconomic framework agreed under the SBA is a prior action (PA, Table 5).
Approval by the Minister of Finance and dissemination to the spending units of a spending plan for the latter in line with the macroeconomic framework agreed under the SBA is another PA. This fiscal program will be achieved through the implementation of the following measures:
rcookie says():NOW THIS IS FOR YOU TO MAKE YOUR CHECKLISTS...SO TO MARK DONE AS THEY ARE REPORTED COMPLETE....
rcookie says():collect at least ID 7.4 trillion (6.1 percent of non-oil GDP) in non-oil revenue, compared toID 8.8 trillion (6.5 percent of non-oil GDP) in the 2016 budget, in spite of the downwards revision of non-oil growth to -5 percent compared to zero in the budget, due to the following measure:
rcookie says():increase in personal income tax revenue through a reduction of exemptions, which will yield ID 0.3 trillion in 2016 (¶23);
rcookie says():contain non-oil primary expenditure to ID 72.6 trillion (59.4 percent of non-oil GDP) compared toID 85.5 trillion (62.8 percent of non-oil GDP) in the 2016 budget; this reduction will be borne mostly by the following measures:
rcookie says():reduction of the wage bill by ID 3.0 trillion, through natural attrition, delaying hiring of new staff, reduction of discretionary benefits, and revising wages of military and security personnel in light of observed number of staff absent without leave; this will still leave room for an increase in the wage bill by ID 3 trillion compared to 2015;
rcookie says():AGAIN...HERES WHY THAT PENSION LAW IS SO IMPORTANT......
rcookie says():reduction of pension payments by ID 1.8 trillion, by the enforcement of the existing rules preventing collection of multiple pensions or collecting pensions without minimum contribution period or below legal pensionable age; this will still leave room for an increase in pension payments by ID 1 trillion compared to 2015;
rcookie says():reduction in goods and services by ID 2.2 trillion, while making room for the increase in electricity charges from ID 360 billion to ID 675 billion, as a consequence of the fivefold electricity tariff increase decided by the Council of Ministers (¶24); this will still room for an increase in goods and services by ID 1.9 trillion compared to 2015 excluding electricity charges;
rcookie says():reduction of transfers by ID 2.4 trillion, including through less spending to replenish the food stocks of the Public Distribution System (PDS) in light of the higher than programmed level of the these stocks at end-2015; this will still leave room for an increase in transfers byID 4.5 trillion compared to 2015, and an increase of the social safety net transfers byID 1.8 trillion, including an increase of the PDS by ID 0.2 trillion;
rcookie says():reduction of non-oil investment expenditure by a further ID 3.6 trillion through prioritizing projects already started and focusing on the most crucial new ones, and delaying other projects to later years; this will imply a cut of non-oil investment expenditure by ID 7.3 trillion compared to 2015;
rcookie says():the wage, pension, and other cuts also include significant burden sharing by the Kurdistan Regional Government (KRG), which is broadly commensurate with its share in the budget of the federal government: while the transfers to KRG were to amount to ID 13.1 trillion in the 2016 budget, this figure will be reduced to ID 9.8 trillion in the revised fiscal program for 2016.
rcookie says():(ID 2.8 trillion) and the oil investment expenditure (ID 14.7 trillion), the government will have recourse to oil revenue (ID 56.6 trillion), domestic financing (ID 21.5 trillion) and external financing (ID 4.5 trillion):
rcookie says():The domestic financing will be covered by the issuance of Treasury bills (ID 14.9 trillion), out of which most (up to ID 12.6 trillion) will be refinanced by commercial banks at the discount window of the CBI, the issuance of national bonds for the general public (ID 5 trillion), and the drawdown of government deposits in the banking sector (ID 4 trillion).
The amount of central bank indirect monetary financing will be revisited on the occasion of the first review in light of the success in raising domestic financing by other means. If oil revenue is higher than programmed, the government commits to save the excess oil revenue collected over the amount programmed in order to reduce the indirect monetary financing of the budget deficit by the CBI.
rcookie says():AND.......ADD THESE PUPPIES UP...........
rcookie says():The external financing will be covered by loans from the IMF under the SBA ($1.9 billion),
the World Bank under a Development Policy Loan to be disbursed in December 2016 ($1billion),
a bond issued with full guarantee of the United States ($1 billion),
loans by the World Bank guaranteed by France ($450 million),
the United Kingdom ($430 million) and Canada ($120 million)
budget support loans by the Japanese International Cooperation Agency (JICA, $200 million),
and a Eurobond issuance in the last quarter of 2016 ($1billion).
The external financing will also be covered by project loans from the U.S. government (﴾$2.7 billion, ¶11)﴿,
Germany (﴾€167 million, i.e. the €500 million disbursed over three years, ¶11),
JICA ($323 million),
the World Bank ($120 million),
Italy ($66 million),
and the Islamic Development Bank ($54 million).
rcookie says():The government will not resort to the accumulation of arrears to finance the deficit. It commits to a zero ceiling on new external arrears to its external creditors after June 30, 2016 (continuous PC, Table 1), a gradual elimination of the existing stock of outstanding arrears to IOCs by the end of 2016 (¶11), and regular inventories of domestic arrears with a view to ensuring that new arrears do not accumulate and to paying down existing ones after proper audit (¶25, third bullet).
rcookie says():AND ........THIS COMPLETES THE PLAN.........
rcookie says():NOW.....NEXT TIME SOME CARNIVAL BARKER STARTS OPINING AND FUMBLING WITH THE FACTS....SHOW THAT TO THEM......
rcookie says():SLEEP MUCH BETTER AT NIGHT FOLLOWING THESE PEOPLE.....
jimplants says():RC they would not understand or even try
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