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UU1012 – “Re-positioning Iraq for Wealth” by Mnt Goat
Today’s news letter is a long one. Sorry but there is so much confusion now and people are anxious and wondering where is the RV. So I have to take some time now to explain to you what is going on.
I hope everyone also read my last news letter dated 01/28 and 01/30 since this is a continuation of this ongoing saga and this news letter will then make more sense to you.
Today is Monday Feb 2nd and still no RV. Very, very interesting articles coming out of Iraq now in the aftermath of last week’s historical passing of the 2015 Budget Law.
One article in particular I thought I would share with you and should be explained in detail since it is telling so much on when they intend to open and spend parts of their budget.
We all should know by now that when they do begin to spend the 2015 budget they will need to fund it somehow. They will have to have an international currency to meet their international obligations. There is no way around it.
If they open this budget and do not have the funding to meet it (liquidity) they will be insolvent. This will not go over too well with the international community since there are international obligations within the budget they needed to fulfill. They will lose credibility.
In the face of what they are confronting with the money needed to fight ISIS and all the bad publicity about the corruption of Maliki, (the 800+ billion of missing funds) and how they are trying to create a safe haven for investors and tourists to come into Iraq, I sincerely do not believe they will want to be looked at as an insolvent country. I do not believe this will happen.
In fact in my mind I fully believe this funding must come very soon. I believe they have already provided for some of these funds, as I described in my last couple news letters. I will not explain this again and I rely on you to go read them.
We see yet more articles too on this topic coming out such as the needed international tie-in for the Mastercard. Did you read this one? I sensed a frustration in that one.
There is also the ATM machines where they can not use the 3 zero notes. These machines have been purchased as a great cost to modernize Iraq years ago however they can only be used when the lower denominations are issued (such as when the purchasing power of their currency increases significantly).
Kuwait too has decided to postpone future war reparation payments as they make backdoor deals to get this owed money on other terms.
Can they ratify the budget and then just sit on it?
Yes they certainly can do this. They have done this with countless other laws already. This has been a huge problem all along for anyone trying to figure out this process. It is the not as straight forward as we would like it to be. But remember also we are not in the Maliki administration anymore.
Things are now different and moving along. There is a whole “package” of laws they are sitting on.
They are all related and interconnected with the implementation of the budget law and so we can expect them all to be released about the same timeframe. Something for all of us to watch for in the Iraqi news. Could it be other laws still need a fine-tuning?
Does placing the budget in the Gazette (their law library) automatically cause it to be implemented?
Technically the answer to this question is – YES. This is how it is supposed to work. However they have already taken many laws in the past and posted them in the Gazette only to implement them months later.
So there is no guarantee they will not now do this with the 2015 budget law if they get stalled in implementing the revaluing process of their currency. I am not saying they are going to do this but I am saying it is a possibility.
If we do not see some re-pricing of the dinar very soon – like this week sometime we know the CBI is having issues with establishing the value they need for the currency and they will not revalue until the economy of Iraq is re-positioned to do so.
I explain all this in much more detail under the topic of “future value of the IQD” section of this news letter. What explain what I mean by “re-positioned” or “re-positioning”.
But first let’s look at the current news about the 2015 budget saga because this event is driven by the target timeline (or deadline) of this re-positioning to be completed as you will see.
Current News Article
It was announced by the parliamentary Finance Committee member Ola Nashi that the 2015 budget was sent to the presidency on Sunday for ratification as required. The president of Iraq now has 30 days to approve the bill or voice his objections to parliament.
Nashi also added in a statement to the press that the process of sending the law to the presidency and ratified take one month only. So he confirmed the process for us.
Nashi also commented that it would be announced in the Official Gazette and rendering it to online sites for the citizens to view.
Now here is the interesting part of her news blast. She also explained that money to allocated to the ministries of justice, agriculture, trade, and for Intelligence and National Security will begin as of the first of the next month of March. The allocations for the Ministry of Education will begin starting from September of this year.
What does this mean to us. This tells us where they are in the process of finalizing the budget. Technically president Masoum could take till the end of February to ratify it and they could be in a holding pattern for any re-pricing of their currency until this timeframe.
Nashi does say in fact that the allocations for certain ministries would not begin until March.
This tells that even if Masoum does speedily ratify the budget they are not in a position to open it and begin spending it for these ministries until this time.
I believe she is making this news conference to satisfy the citizens and to let them know when the funding is to be applied. sort of settling the crowds since they have been promised these reforms for so long.
But what about all the other ministries like the interior ministry? There are huge sums allocated for items related to this ministry. Here we see is where all the reconstruction projects are and the money for the National Guard efforts. We know these security forces have been without pay now for over a month.
They are now threatening to walk off the job if not paid. Can they wait until March? Nashi is not saying they would since she does not talk about when the allocations for this ministry would be spent.
$$$ Future Value of the IQD $$$
This is one of the most misunderstood issues in these dinar intel forums. I see how these so called dinar “gurus” have messed with your minds and totally confused many on this topic. Many of these gurus have no business preaching news about this currency revaluation since they really know very little.
So let me explain and clarify this topic for you. I hope this will help you. However it is a long read and my explanation takes time to understand but it is well worth the long read. So please settle back and relax. Get a cup of coffee and your reading glasses. Maybe even print it out and take it to the toilet with you….lol…..
Remember the CBI can not just arbitrarily just say their currency is worth a new value. THEY MUST CREATE THE VALUE FIRST !
So what does it mean to CREATE VALUE to a currency? For the sake of argument let’s say Iraq did arbitrarily come out with a $3.58 rate. Can they sustain this rate long term?
Many of you are now saying – Of course they can! Do you say this just because you heard about all the oil reserves they have? Really? Think not! Let me explain.
You probably answered this question only from what these “gurus” have been telling you and not from the facts of where the re-pricing process currently is. Re-pricing process?
Yes - there is a plan and this is why everyone keeps saying there is so much for the CBI to do to set up for the revaluation. However it is really not so much the CBI as it is the GOI doing all the ground work.
We see this everyday with the new laws and the unification process. This is all related the positioning of Iraq for a new phase in its history.
Abadi and his team along with the parliament and the workforce here. The CBI is just the brains of this re-positioning effort.
So how to find the value of this $3.58 rate I would first ask this question - What did they “peg” it to? There must be a standard currency used to gauge the new value. The US dollar index is the most widely used and it is widely used in pricing for trade between nations.
You see this international trade is very important. They will need to peg it to something since any rate is arbitrary until substantiated. Trade revenue is what brings in wealth from other nations.
The game is simple- you (meaning other international countries) have wealth and we (Iraq) would like to have it. If we are successful in our trade policies we can provide goods and services to you and you provide us with a stream of revenue. If Iraq manages these new revenues appropriately (prevent corruption) they can become a very wealthy nation.
Comments may be made at the end of Part 2 Thank You