TLAR: This is good that this is happening because of pressure from the IMF. Maliki agrees to cancel the card then says we will put forth cash payments instead of the card and parliament says no its unconnsitutional.
The only way they can cancel the ration card is to do it simultaneously with the raise in value or just after the raise in value. The State of Law is in a quandry.
In order to be accepted into the world banking system the IMF is demanding they stop the cards. They have told Iraq to do this for years now. Iraq, under the Maliki government, has finally agreed.
Dr. Shabibi was pushing for this and the implementation of the tax and tariff law for at least since the beginning of 2010. Both of these things go hand in hand and are necessary to install a free market.
The three basic controls to inflation and dinar support are not yet in use. The three tools are Taxes and tariffs, exchange rate and the aUctions. Shabibi did a good job with only being able to utilize the auctions to support the dinar but as this economy heats up they will need to have all three tools activated.
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TLAR CONTINUES: The ration card cannot be dropped until they raise the currency. Even Maliki's government realizes that now. It would be inflationnary and would probably cause riots and demonstrations.
We saw the truth of that last week in the demonstrations against the removal of the ration card in March. The Maliki government will soon come to the conclusion that in order to have a functioning economy and to actually have a free market society, the must release the other two tools.
IMHO based on their first date of March 2013 that was the planned date to get rid of the card that they will raise the rate sometime in Jan through March. Certainly before what was their planned date.
In addition this government cannot tell the people "don't worry folks, we will have raised the rate to 1 to 1 before then" for obvious reasons.
Remember the SOL's and Maliki's war was with the central bank before because of a clash of ideals and personalities. For the time being that war is over and now they must deal with realities on the ground.
The easy way for them to progress is to implement those illusive tools, the taxes and tariffs and the exchange rate. I look for the tax and tariff law to be again on their plate sometime in December.
To my knowledge it is still scheduled to go into effect in January. It too is extremely inflationary by itself. It has to be introduced in an environment where the currency has value and it is international in order to not also be inflationary.
So again IMHO this is why they on paper at least have to do something with the currency. If this law is left alone and is implemented in January we will see our RV. All of this is economics 101.
ReVbo : What if the IMF made this demand knowing that Maliki would go for it so as to continue getting his grubby little hands on cheap IMF loans now that he can't touch the CBI reserves that he, inexplicably, thought would just be sitting underground waiting for him to plunder.
The people reacted as one would expect, with outrage that this monster is trying to starve their children, and now Maliki is the Grinch Who Stole Dinner.
Now, he's got to backtrack so they don't burn the whole place to the ground, and the IMF owns him again.
He can't get the reserves, IMF will cut him off in a couple months, and Ch7 will ensure his government stays poor and under our thumb until he gives the world community what it wants.
FAST EDDIE: WOW I said this last night in chat that they must raise the value of the currency to be able to remove the ration cards but hey what do I know I am an unemployed nobody.
If Malik & his boys don't raise the value they will postpone the tax & Tariff law & the ration cards will still be used. Shabibi told Maliki & the GOI & Parliament if we raise the value implement tariffs & tax law this would show investors what the tax would be & could help bring in more to build the privet sector as well as the infrastructure law would also do.
Now he also pointed out they would need to raise the exchange rate because those would cause inflation hence the float/rv.
So this brings us to the ration cards where the IMF has told the GOI to get ride of subsides & those ration cards are one of those big clue to they need the dinar to be worth more than it is now .00085 of a cent
the IMF is done playing game & will be calling on loan payment to start being may & they can not do that with worthless currency
another clue that they need to do something with the exchange rate. The sands in the hourglass are falling & time is running out so IMO Maliki's days are # he either has to follow through & raise the rate or they will never get relased form Chapter 7
(yes I know chapter 7 has nothing to do with the exchange rate but it does have to do with the GOI & if they don't start showing democracy & that they are working for the citizens of Iraq the UN will say NO you have not done what is needed).
Talk about the end is near for Maliki if they don't get out of chapter 7 this time I would think the citizen would have to think it because of him.
Monday, 12 November 2012 14: 02 Baghdad LINK
The House decided in its normalTodayAbolition of the Government's decision about replacing ration cash allowance.
According to a member of the parliamentary legal Committee Zeynep alshlani in all Iraq [where] "the House reached a decision to cancel the Government's decision to replace the ration cash allowance and payment terms to citizens generally and unconditionally".
The agenda of the meeting House today included[General call for discussion] Minister [of finance, Commerce and planning] on the ration card.
The Cabinet decided at its [6 month] replace ration money starting from early next month in 2013.
And spokesman Dabbagh said Sunday the Government amending the decision of the Council of Ministers to abolish ration cards.
Al-Dabbagh said in a statement, [where], that "the Cabinet decided to amend its decision to issue ration cards, to serve and support the interests of citizens".
Earlier a source close told Government Ministers that "Prime Minister Nuri al-Maliki is currently in critical as a result of this resolution which might affect the balance in the provincial Council elections, labour may decide after the election."
And among the many Prime Minister backtracked on their decision after boosts people's rejection of this resolution ".
Decision abolish ration cards and replacing them with financial amounts to reactions against it by religious reference and political circles and popular.