(Thank you George for emailing this to Dinar Recaps.)
UU6803 – “Why is the RV stalled?” by Mnt Goat
Today I come to you once again to see what sense we can all make out of this RV saga of the Iraqi dinar.
Sorry but today’s news letter is very long again. I think the longest yet. It almost has to be since there is no such thing as a short news letter anymore from what is happening in Iraq. Things are moving so fast. Even when I try to emphasis only the most important articles and news I still have a difficult time limiting the size of the news letter.
After reading today’s news you would have to be (plainly speaking) darn right stupid not to realize that the revaluation of the IQD is now being stalled (delayed).
So like many of my recent past news letters print it off, grab a good strong cup of strong, hot coffee and settle down in your favorite chair. Read today’s news carefully. It is chock full of goodies.
Today is Wednesday September 9th and still no RV or hopes of an RV window until at least mid September.
I told you from mid August to mid September would be a very critical time for getting these reforms accomplished. I told you Abadi would make a final push to get them completed and it would be very sudden and unexpected by most. We are witnessing all of this now. So was Mnt Goat correct again.
I told you there would be a progress report of the Iraq needed laws and reforms in mid September and out pops news of a scheduled third Conference 9/11-9/17. So who is right again?
I told you that “if” this reform process is successful, we would be in a great window to possibly see the currency reform project pick up momentum and maybe see a significant increase the value of the Iraqi dinar and the continuation of the “deletion of the 3 zeros” project. This would occur sooner than later. Then just recently again out pops 2 important articles by MPs asking the same questions we are asking – that of why has the project to delete the zeros not been completed and why have the lower denominations not yet been distributed?
Funny how we get these type of article just before a critical window of opportunity for an RV is upon us.
But I also said IF THE REFORMS AND LAWS WERE DELAYED we may be seeing sometime in early 2016 for our next window of opportunity for an RV. Many still put words in my mouth and claim I am giving a 2016 date. Did you just read what I said? I said it was all dependent on the meeting being held in mid September 9/11 – 9/17 to determine actions going forward and setting new target dates. So please stop all the needless discussions and attitudes towards the 2016 timeframe. We just have to wait and see how it all plays out. But remember just because you want an RV sooner than later does not make it reality. Remember many also said in April that this RV would never make it till June timeframe. Many swore Mnt Goat was an idiot for her analysis. Now she is also saying we may not see it until 2016 but it is all dependent on the progress.
I firmly expect Abadi to clean up the CBI and Dr Shabib to come back to an “official” capacity to head up the CBI once again before these projects kick off fully. We will soon see if Mnt Goat is correct on this too.
Let’s get going with today’s news. There is so much news again and I will attempt to summarize it for you and put it into perspective.
US NEWSPAPER: MALIKI LEFT IRAQ'S TREASURY WITH ZERO FUNDS
Published: 2015/9/7 11:22 • 171 Reads
Baghdad (AIN) - Iraq’s ability to fight Islamic State extremists who control roughly a third of the country is hampered by a financial crisis that has left the Baghdad government operating “hand to mouth,” Iraqi Ambassador Lukman Faily warned this week.
The inability to pay salaries on time to the soldiers and militiamen fighting the Islamic State, also known as ISIS or ISIL, has hurt morale and hindered progress in operations to retake key hubs that were captured by the jihadists, Faily said in an interview Thursday. And belt-tightening measures such as consolidating government ministries threaten to exacerbate ethnic and sectarian tensions by upsetting the delicate power-sharing quota system that’s been in place since the U.S.-led occupation authority took charge following the invasion of 2003.
“This goes back to not making your support conditional,” he added, referring to Iraqi officials’ frustration with the Obama administration’s reluctance to bail them out last year unless Baghdad first made reforms to address the corruption and ingrained sectarianism that softened the ground for the extremist takeover of Mosul in the north and most of Anbar province in the west.
Faily, who belongs to the ruling Dawa Party, blamed the crisis chiefly on the plummeting price of oil — the government relies on exports for some 85 percent of revenue — though economists and foreign policy analysts say that decades of mismanagement and corruption also have contributed.
Faily acknowledged government fault, citing an overdependence on oil revenues and the slow pace of addressing graft such as the use of “ghost employees,” workers who exist only on paper so that supervisors can pocket the salaries.
Much of Iraq’s spending is defense-related as the country struggles simultaneously to rebuild the U.S.-trained military that collapsed during the Islamic State onslaught and to launch offensives to retake captured territories. And they’re doing this with a budget that was based on oil at $56 a barrel, though in recent weeks the fluctuating price has dipped to closer to $40 a barrel. A revenue-sharing deal between Baghdad and the mostly autonomous, oil-rich Kurdistan region has broken down, depriving the central government of another cash stream.
Ben Van Heuvelen, managing editor of Iraq Oil Report, which closely monitors the Iraqi oil sector, said a major cause of the crisis is that the previous administration of Nouri al-Maliki “left zero financial buffer for the inevitable down cycle in commodity price.” He said that al-Maliki’s successor, Prime Minister Haider al-Abadi, has “made some good moves,” including painful spending cuts and exploring revenues outside of oil, but that he stands little chance of yanking the country back from the brink anytime soon.
A U.S. official, speaking on condition of anonymity because it involves sensitive diplomatic and defense matters, said the Obama administration has increased its military assistance to Iraq in recognition of the twin crises of the Islamic State presence and the severe financial strain due to collapsing oil prices.
The official acknowledged that “it is an increasing challenge” for the Iraqis to fight the Islamic State, “and that’s why we’ve put so many of our own financial resources” into the campaign.
Foreign military financing, which uses U.S. funds to procure weapons, included $300 million for Iraq for fiscal year 2014 and $150 million for 2015 before jumping again to $250 million in the current pending request for 2016. In addition, the official said, the U.S. military donated some surplus American equipment, including 300 MRAPs, mine-resistant armored vehicles.
“They need a bunch of things across the board, everything from anti-tank weapons to MRAPS to Humvees to arms and equipment,” the official said.
As of Aug. 15, the official said, the total cost of U.S. operations against the Islamic State in Iraq and Syria is $3.7 billion, with an average cost of $9.9 million a day. The official said critics who question why the United States is spending so much in defense of one of the world’s most oil-rich nations are ignoring the broader consequences should Iraq lose more ground to the extremist group.
“You can’t look at this as an Iraqi fight,” the official said. “ISIL is a threat to the region, to the international community. It’s a mistake to look at this as an Iraqi or a Syrian fight. ISIL has shown the global implications they can have, and just their sheer brutality needs to be defeated. To characterize it as an Iraqi fight is wrong.”
Faily acknowledged the U.S. help and said that the Germans and Dutch, too, have contributed light weapons, equipment and anti-tank systems. But most battle-related costs, he said, are Iraq’s responsibility. That goes not just for the regular army and security forces, he said, but also for some of the Shiite Muslim militias known as the Popular Mobilization Forces.
“The actual fighting on the ground we’re financing ourselves,” Faily said. “Salaries, weapons, uniforms, equipment.”
But the budget crisis means that paychecks are late — “three months behind, four months behind,” Faily said — which, in turn, deals a blow to the morale of a fighting force that’s already much maligned for its evaporation during the Islamic State offensive that took Mosul, the second-largest city in the country.
“You want your professional army to deal with things professionally,” Faily said.
There’s also the risk, Faily said, of losing recruits to paramilitary groups, particularly the Iranian-funded militias that the U.S. government designates as dangerous “special groups.” Though just 35,000 special groups militiamen are part of the 120,000-person Shiite paramilitary structure, he said, the loss of manpower to them is a blow to the government’s effort to assert authority over all armed factions in the fight against the Islamic State.
Faily said Iraq’s finance minister is traveling to London and Washington next month in hopes of selling some $6 billion in Iraqi bonds, and that the Iraqi Cabinet is scrambling to cut spending in other areas, downsizing diplomatic outposts and halting some investment projects. Iraq also received a credit rating for the first time and secured a loan agreement from the World Bank.
Other budget trims have been more controversial, such as doing away with some high-ranking ceremonial positions and consolidating government ministries. The divvying up of official posts according to sect, ethnicity and political party was a longstanding tactic to appease the disparate groups that were jockeying for power after the fall of Saddam Hussein’s regime.
Though some analysts are hopeful that, in the long run, the changes will do away with an ineffective patronage system, they agree that in the short term the moves threaten to further aggravate internecine tensions, jeopardizing Abadi’s broad reform agenda. And that, according to U.S. officials and analysts, opens even more opportunities for extremists to gain from the disarray.
“If you believe, as I do, that deep political problems in Iraq created an environment that was ripe for ISIS to take over a third of the country, then you also believe that there needs to be some kind of political foundation to any long-term solution to the problem,” said Van Heuvelen, of Iraq Oil Report. “But if the way you’re used to finding political solutions is by throwing money at the problem and bringing constituents into the fold by promising them a slice of this very lucrative oil pie, then if that pie shrinks, your ability to create political solutions evaporates.” /End/
IRAQ BEGINS [ON] THURSDAY TO PROMOTE AN INTERNATIONAL BOND ISSUE OF SIX BILLION DOLLARS
banking sources said that the Iraqi government will start promotion campaign next Thursday for the first international bond issue in nine years as it seeks to finance a budget deficit because of falling oil prices and the war against Sunni Islamist al-Daash.
Sources familiar with the matter told Reuters that "Baghdad want to combine up to six billion dollars in a series of versions of the bills dollar, but the first version is expected to be much smaller."
Said Mrtbo versions that "the banks Citigroup, Deutsche Bank, JP Morgan arranging version and will begin meetings with investors in the United Kingdom and the United States.
In spite of the political risk in Iraq is expected to contribute to Baghdad put the largest oil producer in the" Organization of Petroleum Exporting Countries [OPEC] as the second to reassure buyers on entitlements and the large oil fields in the south of the country not exposed to fight directly in addition to that Iraq adopt an ambitious plan will continue for several years to increase its production of oil.
It is expected that Baghdad pay a high price for borrowing, where the yield 10.37 percent on the Iraqi dollar bonds due in 2028.
Prior to the sale this month, Iraq won the first his sovereign credit rating gave him Bretton where Standard & Poor's and Fitch rating B- a rating below six degrees of investment grade.
He was Finance Minister Hoshyar Zebari said in 22 of the last June that Iraq has begun promoting overseas bonds Tune six billion dollars.
The government's much-needed liquidity as it expects a deficit of about $ 25 billion this year in the size of the budget of about 100 billion Dollars.
Link to PART 2