BLC Administrator tlm724 and Shredd Chat 6/24/2013 (BondLady's Corner)
[tlm724] I found this Letter of Intent from Iraq to the IMF dated Sept 2004 on the IMF site
[tlm724] 2004 now remember that
[tlm724] Iraq—Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding Baghdad, September 24, 2004
[tlm724] heres the link http://www.imf.org/external/np/loi/2004/irq/01/index.htm
[tlm724] I am going to show just portions because its long its to the IMF -- i'll bring in the section from the letter and then show supporting evidence as to current day position
Read More Link On Right
[tlm724] 17. Monetary policy has focused on maintaining price stability, in the context of a stable exchange rate. The CBI has been conducting daily foreign exchange auctions to limit the impact on base money growth of the sale of the government's oil export earnings.
This strategy has led to a period of low inflation and a significant accumulation of gross international reserves, which amounted to about US$4,273 billion at end-July 2004 (implying base money coverage of about 60 percent).
Shredd: There is still work to be done here but we've seen some success. The head of the Association of Iraqi banks Adnan Chalabi said that the stability of the financial sector need to achieve economic development.
28 banks are participating in the auctions which are taking place 6 days a week now. Pricing commitments at these banks and pumping supply of the dollar is somewhat mitigating this price stability issue.
The reality is, with Iran and Syria drawing in USD as fast as they can, the options available to eliminate this scenario seem limited to introducing the lower denomination dinar and/or the new three language notes.
The reason this will be successful is because these neighboring countries obviously would not have any of these notes in their possession, the counterfeiting would slow down substantially and the only remaining conduit for feeding this currency issue is the circular exchanging of the dollar.
Once the dinar emerged, the dollar could be dried up. We of course know introducing the small denomination dinar would mean an exchange rate of near par, otherwise it's supply would be at risk.
20. The government has begun working with Iraq's external creditors towards the resolution of its unsustainable external debt burden.
Iraq's debt at end-2003 was preliminarily estimated by Fund staff at US$125 billion (7 times Iraq's GDP), of which US$42 billion are due to Paris Club sovereign creditors, US$67.3 billion to non-Paris Club sovereign creditors, US$0.5 billion to international financial institutions, and US$15 billion to private creditors.
IMF staff completed debt sustainability analysis (DSA) for Iraq in May which, in our opinion, shows that Iraq will need substantial debt reduction (in the neighborhood of 90% to 95%) to reach external and fiscal viability. Iraq's DSA has already been discussed with the Paris Club and Iraq's main non-Paris Club sovereign creditors.
We are also making significant progress in reconciling our external debt and in improving data on total outstanding debt. A number of our major creditors have agreed to make efforts to reach agreement on restructuring Iraq's debt by the end of 2004.
[tlm724] thats alot of dough
Shredd: Iraq committed to pay tens of billions of dollars leaving only a few billion note that foreign and Arab countries has waived its full debt to strengthen the democratic system in Iraq, such as the United States, Britain, Russia and the United Arab Emirates, and dozens of other countries.
We know debt is really not an issue for Iraq since so much has been forgiven and the Paris Club was a big part of this. Much of the world did not want to stand in the way of Iraq's recovery so this potential roadblock was removed.
[tlm724] i am just gonna throw in a lil art here real quick to make a point December 31, 2003
[tlm724] 2003 !
The Japanese Foreign Ministry announced December 29 that Japan would forgive "the vast majority of its Iraqi debt," if other countries do the same, and on the same day the official New China News Agency said China "will consider reducing the debts owed by Iraq out of humanitarian concern."
A joint statement released December 16 after a meeting between French President Jacques Chirac, German Chancellor Gerhard Schroeder, and Baker read, "Debt reduction is critical if the Iraqi people are to have a chance to build a free and prosperous Iraq."
On December 18, Russian President Vladimir Putin announced that Russia would join negotiations to lower Iraq's debt to the Paris Club group of lenders. There were also secured commitments from British Prime Minister Tony Blair and Italian Prime Minister Silvio Berlusconi.
[tlm724] Does this line up of countries seem familiar to you ? China, france, Russia, UK from the above they should China, France, Russia, United Kingdom, and United States 5 memeber states of the UNSC
27. Given the significant dollarization in the economy and the vulnerability of the economy to large oil price and production shocks, the CBI will aim to build up its net international reserves to at least US$5 billion by end-2004, and US$6 billion by end-2005
[tlm724] look at those reserve numbers !! seems a lil sparse doesn't it, just shows how far they have come
Shredd: Turki recently announced "Central Bank reserves now money and gold exceeded $ 75 billion" Reserve Bank would exceed $ 80 billion by the end of next month."
This volume puts Iraq at the highest in the region and in the top 30 of the world. http://en.wikipedia.org/wiki/List_of_countries_by_foreign-exchange_reserves
[tlm724] exceed 80 billion !!!
37. The government is also committed to enhance the effectiveness of the social safety net by moving over the medium term from a food ration system to a cash distribution system targeted at the poor and unemployed.
This monetization of the food basket should help domestic agriculture, encourage private trade, and eliminate one of the most pervasive sources of price distortions, while at the same time ensuring that families in need are properly compensated within the social safety net.
To ensure a successful transition towards a monetized system, the government will put an efficient payment system in place, and allow state trade entities to take up commercial business (in import activities as well as wholesale trading).
An effective public information campaign on the benefits of moving to a monetized social safety net will also be mounted. Regions and local governments will also continue to receive significant transfers to carry out their responsibilities.
[tlm724] Ministry of Planning announced on Wednesday June 12 that the High Reform Commission has a strategic ration card that would reduce poverty by turning the ration system into a social protection system; confirming that the percentage of poverty in Iraq has decreased to less than 20% after it recorded a percentage of 70% at the beginning of the century.
"The High Reform Commission for Ration Cards drew a strategy to reduce poverty by turning the ration system into a social protection system", said Ministry of Planning's acting Minister and Head of the Central Organization for Statistics, Mahdi Al Aalaq.
He confirmed that "the percentage of poverty in Iraq has decreased to less than 20% after it recorded 70% at the beginning of this century". The Commission is reviewing the final report to replace the ration system used in Iraq with a smartcard used to distribute items.
"The electronic system will give citizens a greater flexibility in choosing the items they desire to buy and the location they want to buy them from, under the supervision of the government", revealed Al Aalaq. He pointed out that "the system requires practical and technical preparation".
"This system will be approved and launched as a trial in two Iraqi provinces by 2,015; before adopting it in Iraq's provinces", he added. Ministry of Planning announced on May 11 , 2013 that the percentages of poverty in Iraq have decreased as the line of poverty rose to 80 thousand dinars; after it recorded 77 thousand. The number of people suffering from malnutrition went from 7% to 4%.
41. During 2004, the CBI has relied on foreign exchange auctions as the principal instrument in the conduct of monetary policy. The CBI has utilized the foreign exchange auction to manage liquidity in the system, to absorb excess dinars, as well as to provide foreign exchange to private sector activity.
To allow for more flexibility in managing monetary policy, the CBI is in the process of broadening its set of monetary policy instruments.
Shredd: Hadi al-Tamimi recently said; "the Central Bank is responsible for the decline of the dinar against the dollar in the past period, affirming that the current monetary policy does not support the value of the Iraqi dinar.
To sum up the oscillation Iraqi dinar exchange rate against the US dollar of current management responsibility to the Central Bank, because of its policy that made the sales dollar monopoly and lifted control over local banks.
The Central Bank is required to review monetary policy and a new policy to pursue the sale of hard currency and the possibility of delivery to eligible traders and owners of capital, taking into account the principle of balancing supply and demand in the market.
The continuing decline of the value of the Iraqi dinar against the dollar will affect the overall economic situation in the country.
The Central Bank has a tough job of managing liquidity, especially as of late. Like I said above, with Syria and Iran drawing Iraq's currency of choice (USD), it seems to me only one option remains. Time will tell.
45. The government remains committed to an open trade and exchange system. In that regard, we are taking steps to become a full member of the World Trade Organization.
Looking forward, the government will avoid imposing restrictions on payments and transfers for international transactions, to introduce new or intensify trade restrictions for balance of payments purposes, or resort to multiple currency practices.
The government will also discuss with IMF staff the possibility of accepting as early as possible the obligations of Article VIII, Sections 2, 3, and 4 of the IMF's Articles of Agreement
[tlm724] okay that’s all the heavy reading
[tlm724] and we know sometimes its hard to get the articles, heck i go through that everyday but as you can see the IMF and Iraq basically had the plan laid out and iraq has come a long way baby!!
[tlm724] you should all be very excited about the removal of all restrictions
[tlm724] you should be watching as the country explodes from investors
[tlm724] you should be watching the news for further monetary changes
[therealbubbie] IMF and Iraq basically had the plan laid out ... yeah get out of chapter 7 and will let this baby fly !!!
[tlm724] abd watch closely and listen well to what bondLady is telling us !
[BondLady] y ty
[tlm724] she can tell you things from years ago and put it together with current events
[tlm724] she is a puzzle master and we should be most grateful to her !
[BondLady] when i have time to remember all the things in me head
[BondLady] tyvm timmy
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