ReddStarr: My recap of things....all IMPO only....of course.....
“The Iraqi authorities and IMF staff have made good progress towards reaching an understanding on a program of economic and financial policies that could be supported by financing.
This program would include further fiscal consolidation to bring spending into line with the lower level of oil prices and maintain debt sustainability"
"The steep fall in oil prices is causing a large external shock to the balance of payments and budget revenue, which depend predominantly on oil export receipts"
Iraq was giving a couple options, consolidation (not paying out as much) & diversification (more money coming in) through other projects, non oil related. i/e Agriculture, manufacturing, etc.
We know from the SMP review (end of March) which I'm not going to get into fully again because I already covered in a few weeks ago, that Iraq had already made significant progress. By now all has been completed, and waiting the final approval.
"Three out of the five indicative targets at end-December 2015 were met, (these two were not) owing to the under execution of expenditure on wages and pensions, goods and services, and transfers. The target on social spending was missed by a small margin"
How have these been corrected? Ask yourself....
What's the fastest way to control spending "In house"?
Three ways, consolidate offices, lay-offs, get rid of corruption.Which Abadi has done. IMO, corruption is still in the process,but it's not the same as it was a couple of years/months ago.
Next you reform you financial policies to know where your spending is going. If you follow the news, Abadi is in control of that as well. "Mis-management of money" seems like a thing of the past. At least it's not running rampant as once before.
Due to this, the amount of money Iraq has been able to save/recover should be enough to bridge most of this gap. As outlined above.
There were a few other targets to be met as well. According to this statement.
"One out of three structural benchmarks was met and the other two were not yet met but good progress has been made and authorities expect to meet them shortly"
So based on that, IMO, we can safely assume this is complete.
IMO, what was asked of Iraq in the SMP is accomplished!
We continue to hear the IMF talk about low oil prices and how the drop has affected the budget. Even as recently as yesterday when the SBA was released. The IMF also stated that part of the new loan they are to receive will help bridge gap caused by the falling oil prices. This will also help Iraq to come off of any remaining restrictions. IMO, this is what we have been waiting on!
They are pointing this out to everyone!
So What's next?
"The first review should be completed by end-May 2016"
From now until the end of the month, I suspect that the IMF will have another press release. They will let the International world know that all requirements from the LOI/SMP have been met.
I do not believe they will announce article 8 yet with this announcement. (even though we all know better) Bear with me!
Why no announcement on article 8 yet?
Them announcing article 8 acceptance will require a rate. I don't think they are going to release the rate until all the details about the loan are completed.
The only reason I say "not yet" is because of the wording in the press release yesterday.
“The IMF Board could consider the three-year SBA once agreed prior actions have been implemented, in June or July"
Could they be talking about the requirements mentioned above in the LOI/SMP? If so, we could be seeing two press releases happening almost days apart? (I do love the 3 day weekend coming up)
If not, I would suspect the LOI/SMP to be at the end of May, as mentioned before and article 8/rate to be sometime in June when the loan specifications are done. I do not see this going in to July, again IMO.
Another reason I don't think we will see article 8/rate yet, is the fact that Iraq is still working on new credit ratings and talk about "international bonds" again. We are seeing signs that this should happen fairly quickly. IMO! So I'm not overly concerned about this dragging on very long.
I say all that to say this.... Where do we stand & what do we need to look for going forward?
In the 12 years I've been involved with this investment, I can say with the utmost confidence, that we are very close! IMO, closer than we have ever been! Look for these things to happen in the next few weeks/month
1. End of May review
2. New credit ratings
3. SBA reached
4. Currency auctions stopped
5. Article 8 & Rate
6 International bonds
(not in any particular order, but close)
Again this is all IMO. Use your best judgement & do your due diligence!