kaperoni] Kaperoni – where we are at? What comes next now that the budget is passed. 3/7/2013
[kaperoni] I wanted to do a small chat on what to expect in the coming days…
[kaperoni] First, be assured…there was no RV in the 2013 budget. How the budget is financed is fully documented in the following article… Iraqi Budget 2013 – Background Paper
[kaperoni] Today, 3/7/2013 Iraq passed the 2013 budget including 750 billion dinar to pay the Kurdish oil companies.
Read More Link On Right
[kaperoni] This is factually confirmed with this article…
[kaperoni] Parliament approved the budget 2013 and raises its majority to the 19 of March 7.3.2013
[kaperoni] Now, If you read this article, Parliament has recessed until March 19th. Hard work deserves a break, right? Lol
[kaperoni] Here is a quote to confirm the recess…
[kaperoni] “…raising House Speaker Osama Nujaifi session to the 19 of March Current .”
[kaperoni] So, once again we wait. Over the past several weeks, several articles have surfaced talking about revising the banking law, economic laws, and investment laws. All of which IMO, will be passed in a basket shortly thereafter when Parliament returns. So a best case scenario is at the end of March these laws are passed.
[kaperoni] Now, something rather important happened yesterday. Something that if the gurus knew anything at all about Iraq, would have known. But they didn’t. So once again, facts, and facts only are what we should follow in this investment.
[kaperoni] What occurred was a series of meetings between the USA and Iraq to active a portion of the Strategic Framework Agreement. (we will discuss this more on the CC Friday night).
[kaperoni] Though the SFA was signed months ago, parts of it are implemented in stages. The part that was is now activated or now “in force” us the “Trade and Investment” portion of the SFA. This is significant. Here are two articles and links…
[kaperoni] Trade and investment agreement with the United States enter into force - 03/06/2013
[kaperoni] and this article..
[kaperoni] The start of implementation of the Convention on Trade in Iraq - U.S. 7/3/2013
[kaperoni] These articles are significant because they give us details to the “Trade and Investment” portion of the SFA.
[kaperoni] This is how we are going to see an increase in the value of the dinar. This portion of the SFA is going to push Iraq into a free market economy, thus making Iraq integrate with the world. And as a result of that effort, the New Iraqi Dinar (NID) will become internationally convertible.
[kaperoni] Here are some quotes from these articles…
[kaperoni] “Announced on Wednesday, to enter trade and investment agreement signed between Iraq and the United States into force. This came during the third meeting of the Joint Coordinating Committee between the two countries in the light of the Strategic Framework Agreement, which was chaired by the Iraqi side, Deputy Prime Minister Ruz Nuri Shaways, and the U.S. side Michael Delaney, and Deputy U.S. Secretary of Commerce.”
[kaperoni] And this one…
[kaperoni] “He added: that Iraq is serious in its quest to enable and facilitate the completion of foreign investment, particularly from the United States of America, by making the necessary adjustments in the investment law and the laws and regulations chock him,
to create a fertile environment attractive for foreign investment and local levels, and including giving freedom to the investor bring employment and expertise from abroad and freedom movement of capital to and from Iraq, and to give guarantees not to expropriation or nationalization of investment projects.”
[kaperoni] The key here is this statement…”…freedom movement of capital to and from Iraq”
[kaperoni] I do not believe they are talking about some agreement between HSBC or EX-IM bank which would perform the “repatriation” of the currency on a financial transaction. This is only a stop-gap type solution.
It is clear, that Iraq needs to make the dinar internationally convertible through the IMF (Article 8 to fulfill the “freedom movement of capital to and from Iraq” standard.
[kaperoni] Here is another quote…
[kaperoni] “The agreement aims referred to the development of trade and investment relations, and reviving the Iraqi economy, and supporting private sector development, and create jobs, and expand trade, and the reintegration of Iraq into the global economic system.”
[kaperoni] This gives us the answer we are looking for. The quote… “…the reintegration of Iraq into the global economic system.” Seems to confirm that in fact only moving from IMF Article 14 to Article 8 would achieve these results.
[kaperoni] So what I expect in the coming weeks (after the basket of laws pass, is Iraq to honor the IMF Stand-by-Agreement terms (remember that? It expired on Feb 23rd, 2013) buy accepting the benchmarks set forth in that agreement.
One of which was to move from the closed “currency board” monetary policy the CBI has been in since 2003, to the new “exchange regime” stated in the SBA.
[kaperoni] I have written other chats on these “exchange regimes” that are posted on DinarAlert.webs.com
[kaperoni] Keep in mind, a RV (overnight substantial rate change) is not an exchange regime under the IMF.
[kaperoni] It is my opinion, Iraq will move into a free floating currency regime for a period of time to let the world market dictate the rate of the dinar. This regime, is the most appropriate temporally to raise the value of the dinar globally based on Iraq’s actually goals, wealth and achievements to date. No matter what regime Iraq chooses, it will begin to raise the value of the currency.
[kaperoni] I think this article sums it up best… LINK
[kaperoni] High rates of inflation and the decline of economic development for the low value of the dinar - 06/03/2013
[kaperoni] "the power of the Iraqi dinar and monetary value depends on the strength of the country's economy and the extent of recovery sectors generating income and not on the auction CBI, he says.
Pointed Moussawi to" The value of the Iraqi dinar does not depend on what is sold at auction CBI but value of the dinar lies in the strength of the country's economy all segments of industry, tourism, commercial and agricultural,…”
[kaperoni] If you read this quote carefully, they are telling everyone..the value of the dinar will rise over time based on the success and strength of the development of economic sectors (industry, tourism, commercial and agricultural). Again confirming the dinar will rise in value over time (float) – not overnight.