(Thank you George for emailing this to Dinar Recaps.)
UU6733 – “Corruption Reforms VS Currency Reform” by Mnt Goat
Hello Everyone,
WOW ! Just soooo much news from Iraq again. I can hardly keep up with it.
We are now seeing these reform laws we have waited for so long. These past couple weeks have been amazing and, as I told you, the next couple weeks could be even more amazing, if that could be possible.
Tic Toc Dr Abadi, Mid September is almost here.
So today I sit high on the perch of a large stone boulder, me feet dangling with my computer on my lap. I write this heartfelt news as I truly see the light at the end of the tunnel in the RV saga. I have written hundreds of these news letters in te past and I know now my days are numbered and I will not be with you much longer as I know the purpose of my news letters will end shortly.
I say this today since, for the first time, I see the progress I have been told SHOULD and MUST happen to get us to the completion of the currency reforms we all wait for and desire. We know this will get us all to the bank. I have been trying to explain this plan to all you dinarians over the last many months and now you see truly what mnt goat has been telling you.
UU6733 – “Corruption Reforms VS Currency Reform” by Mnt Goat
Hello Everyone,
WOW ! Just soooo much news from Iraq again. I can hardly keep up with it.
We are now seeing these reform laws we have waited for so long. These past couple weeks have been amazing and, as I told you, the next couple weeks could be even more amazing, if that could be possible.
Tic Toc Dr Abadi, Mid September is almost here.
So today I sit high on the perch of a large stone boulder, me feet dangling with my computer on my lap. I write this heartfelt news as I truly see the light at the end of the tunnel in the RV saga. I have written hundreds of these news letters in te past and I know now my days are numbered and I will not be with you much longer as I know the purpose of my news letters will end shortly.
I say this today since, for the first time, I see the progress I have been told SHOULD and MUST happen to get us to the completion of the currency reforms we all wait for and desire. We know this will get us all to the bank. I have been trying to explain this plan to all you dinarians over the last many months and now you see truly what mnt goat has been telling you.
However there is a stronger, a more spiritual side to the ending of this RV saga. Since this light at the end of the tunnel is the end of the corruption, the end of Maliki and the Iranian influence in Iraq. It is the end of many of the leaches, who were bent of bringing the country of Iraq down while they filled their pockets with loot, causing death and despair to countless of civilian citizens in the process. Yes – we can now see an end to these days and a new light for the people of Iraq.
This is really my message today. A message of HOPE and great JOY.
So I need to begin today’s news letter with a couple paragraphs from Osama al Sharif’s article
Published — Wednesday 26 August 2015, in the Arab News.
I did not include the entire article since today’s news letter is already is very, very long and it is enough to read. Like so many of my long news letters, please print it out, pour yourself a cup of hot coffee and relax in you favorite arm chair. You are going to be here for a while.
No – I am not going to give you a quick date and a rate since you caneasily get this from these other so called intel “gurus” you trust and admire so much.. So go to them and ask for their date and rate and “exchange procedures”. Go to their Q & A and ask them about Vegas. This news is not for you since we seek truth here and real intel.
However for today I tried to slice out the important parts of this article and I hope you can now understand more clearly just what is going on in Iraq. This is my purpose. As you will see it has been a power struggle and now has many faces. It started just prior the 2014 elections but it has been stirring for the last 4 years of the Maliki administration. One side is political, another face is economic and yet another is security.
There are the good Sheites (Abadi patriots) and the other side is the Maliki Sheites (Iranian backed). Yes –Maliki still holds much power and this is why he is still around. There are also the Kurds and the Sunnis who seem to be joining Abadi by the thousands more and more each and every day as these reforms take shape. Everything is changing and the speed is now on warp drive.
But kindly read what I have included below since it explains it all in more detail. Thanks.
Piece of Article below:
Al-Abadi was almost certainly Al-Maliki’s choice it the 2014 elections. Both belong to the pro-Iran Al-Dawa party, which is headed by Al-Maliki. The latter had hoped to continue to run things after he was appointed vice president. Even after his ouster he still controls 93 seats in the parliament.
But Al-Abadi soon realized that Iraq was on the brink of collapse as a result of sectarian divisions, rampant corruption, failing public services, poor relations between Irbil and Baghdad, ill-trained army and the looming threat by Daesh. For him to rally the Iraqi people behind him he had to demolish Al-Maliki’s legacy of corruption and sectarianism. The public protests provided him with an opportunity.
But Al-Abadi must brace himself for a backlash, especially from influential behind-the-scene players. The question is can he carry out his reforms agenda to the end? The fact that religious Shiite parties are divided may help him in the short run. He has the backing of Al Sistani and the charismatic cleric, Muqtada Al Sadr, among others. But the biggest challenge will be to restructure the judiciary if his pledge to hunt down and prosecute corrupt officials is to be taken seriously.
Al-Maliki is already fighting back. He has important influence over the Shiite militias, the Popular Mobilization, who are supporting the army’s campaign to liberate Al-Ramadi and Fallujah in Al-Anbar province from Daesh militants. The militias have been accused of committing atrocities against the Sunnis and are being led by Iranian advisers.
For Al-Abadi to succeed he must first win the confrontation between pro-Iran factions, under Al-Maliki, and the nationalist flank that is supported by the Supreme Iraqi Islamic Council and the Sadri movement and backed by Shiite clerical authorities in Najaf. The outcome of this showdown could determine the future and integrity of Iraq.
Article Ends
Today’s News
Today is Friday August 28th and still we have no news of an RV, nor will there be a window for one at least until mid September when they hold the PTB hold the next review of Dr Abadi’s progress, as was planned for in the last Paris Conference in June. I am not saying an RV in mid September so please do not put words in my mouth.
But I will say there is just so much progress being made in Iraq I hardly know where to start telling you about it today. This is very apparent by all the news articles I bring to you today. Don’t want to read the articles? Then how will you know what is truly going on in Iraq. Oh- you have a secret government contact. Really? He is bringing you all the news you need and its going to RV this weekend. Really? So tell the news then and why you feel it going to RV this weekend.
Many of you might think some of this news is gloomy but then again is the glass half full or half empty?
I tend to look at it this way – We had to bear the Maliki gloom and doom, the stalling and procrastination over the last eight years of the Maliki administration. There were days when only a third of the members of parliament showed up for a session. Now at least someone (the new prime minister Abadi ) is shaking things up and the status quo has definitely been changed. The pendulum is swinging in the other direction now and Iraq now has much more momentum in the right direction.
How long will it take to get to the end of these reforms? At least long enough for them to complete the currency reforms we are waiting for. Who knows for sure but we do know this week they have told us they would like to put the dinar on a currency float and at least are considering it seriously with all the pros and cons of the subject matter. WOW !
They are also telling us that money laundering and corruption in regards to the currency float is the major obstacle. WOW !
They have passed the Parties Law this week (amazing! ) and they are pushing aggressively towards the Judicial Reforms next week, the National Guard Law (maybe tomorrow). We know by passing the Parties law anyone alleged of criminal activity (or under investigation) can no longer hold office or receive immunity. This is HUGE for insuring the downturn of Maliki.
I personally feel once we get these other laws passed we will see the Federation Council announced and the official announcement of Dr Allawi as the president of it. You see there will then be 4 presidents residing in Iraq. We are seeing right before our eyes this new government take shape.
We heard about this money laundering years ago too and so on the surface this is nothing new to us. Supposedly Dr Shabibi maintained a steady dinar value and found ways to stabilize the currency, fighting the laundering was part of the process. But it was always an ongoing battle. When he sucked in the 3 zero notes he seemed to be able to control it but this problem keeps resurfacing. Why?
But this time it is different. A new spin is being taken to the anti-corruption process of money laundering. There is now support from the government (GOI) this time. How is this any different from the past?
Well in the past the CBI could not get any support from the Maliki administration to combat money laundering.Why? BECAUSE IT WAS HIS PEOPLE DOING THE MONEY LAUNDERING! He stood to make billions.
This week the CBI is also telling us there is plans for a near future bond drive, that will be issued to raise capital for the economic crisis and try to balance the budget. Iraq needs funds in local currency and not in hard currency, so the central bank is preparing to launch bonds in local currency for sale in order to strengthen the local currency.
These are NOT international bonds but are to be sold within country only meaning “nationally” sold bonds. So don’t get carried away and put on your RV glasses as of yet.
How will the Iraq citizens pay for these bonds? They will pay for them using the large 3 zero notes, thus the CBI will suck in yet more of the provisional currency. The CBI told us they have a surplus of foreign currency (US dollars) so they will pay out the premiums on the bonds in US dollars. What other foreign currency does the CBI have in surplus? What other foreign currency do they dare introduce to the Iraqi citizens?
US Dollars of course is the only logical choice since they country is all but re-dollarized once again anyhow.
This is good since then eventually, when the lower denominations come out, they can exchange the US dollars (now almost 80-90% of Iraq currency) for the lower denominations, thus flooding Iraq with hard Iraqi lowe denom dinars with higher revalued currency (when the timing is ready).
Since money laundering is ramped for the old 3 zero note dinars, the CBI is telling us this will get yet even more of these large 3 zero notes off the streets, out of corrupt hands and back to the CBI. A win win for the country of Iraq in the process of currency reform. Thus will also help eliminate or lessen the money laundering of the dinar. They have done this tactic in the past too and it always seems to work.
But they also need now to clean up the cause of the corruption or it will only begin again once the new lower denoms are out on the streets and is traded INTERNATIONALLY. This would be a HUGE problem. So do you see how this combating money laundering is yet another one of Abadi’s reforms but not just a tactic for the CBI but also now a GOI reform since this time they want to clean up also the ROOT OF THE PROBLEM. No temporary fixes.
This time they also expect the CBI’s plan to clean up the money laundering it to work but there is a difference spin in it. The difference now comes since they know the ROOT CAUSE, the three ring leaders (referred to as the “three whales” or “kings of the market”) of the money laundering. Oh no! They are actually political figures? Does this surprise you?
Abadi is going after these three political figures on money laundering charges. Will Iran like this? Will this also shake up Iran? Maybe this will lessen the continuance of these corrupt practices when they are prosecuted and used as an example. This money laundering HAS TO STOP. Iranian influence HAS TO STOP.
So why is money laundering so important all of a sudden?
Do they want billions of dinar going into the wrong hands when the value increases? Is the RV then dependent on this part of currency reform? Do you get my point?
Are the reforms then important? Are you kidding me? YES, YES and YES again…..I rest my case….
So can we all now agree to stop this frugal argument between intel providers in our community once and for all and at least come to mutual agreement on this subject matter?
NO REFORMS NO RV….GET IT ?
So here are the many articles today on all of these topics I have just talked about above in my summary for you. I included them for all those bozo the clown intel gurus who seem to call me crazy and a liar. Read them for yourselves since they are not my words but the words coming from Iraq itself. No RV hype, just the facts. Plain and simple !
Article Follows:
How a Currency Crisis in Iraq Risks Fight Against Islamic State (Bloomberg)
Falling oil price is reducing revenue used to fund military.
Dollar reserves have tumbled 20 percent as dinar weakens.
Any currency crisis usually comes with dire consequences for a country, and the threat of one in Iraq shows how the impact can go beyond the economy and markets.
A foreign-exchange crunch because of a drop in oil prices could force a devaluation of the dinar and risk making the fight against Islamic State militants even tougher. The nation, currently OPEC’s biggest producer after Saudi Arabia, is dependent on oil revenue to fund its operations on the battlefield and quell growing unrest over the economy.
Iraq's Looming Dollar Shortage
Dollar reserves tumbled about 20 percent to $59 billion as of July 23 since the fighting escalated a year before, and the losses are accelerating. In the first 25 days of August, the central bank sold $4.6 billion of currency to keep the dinar at a pegged rate, a daily outflow of about $184 million, data compiled by Bloomberg show.
“Iraq’s perfect storm means the country will continue to lose reserves until the government of Iraq decides to devalue the dinar,” said Frank Gunter, author of “The Political Economy of Iraq.” The currency could weaken as much as 20 percent over the next year, he said
This is really my message today. A message of HOPE and great JOY.
So I need to begin today’s news letter with a couple paragraphs from Osama al Sharif’s article
Published — Wednesday 26 August 2015, in the Arab News.
I did not include the entire article since today’s news letter is already is very, very long and it is enough to read. Like so many of my long news letters, please print it out, pour yourself a cup of hot coffee and relax in you favorite arm chair. You are going to be here for a while.
No – I am not going to give you a quick date and a rate since you caneasily get this from these other so called intel “gurus” you trust and admire so much.. So go to them and ask for their date and rate and “exchange procedures”. Go to their Q & A and ask them about Vegas. This news is not for you since we seek truth here and real intel.
However for today I tried to slice out the important parts of this article and I hope you can now understand more clearly just what is going on in Iraq. This is my purpose. As you will see it has been a power struggle and now has many faces. It started just prior the 2014 elections but it has been stirring for the last 4 years of the Maliki administration. One side is political, another face is economic and yet another is security.
There are the good Sheites (Abadi patriots) and the other side is the Maliki Sheites (Iranian backed). Yes –Maliki still holds much power and this is why he is still around. There are also the Kurds and the Sunnis who seem to be joining Abadi by the thousands more and more each and every day as these reforms take shape. Everything is changing and the speed is now on warp drive.
But kindly read what I have included below since it explains it all in more detail. Thanks.
Piece of Article below:
Al-Abadi was almost certainly Al-Maliki’s choice it the 2014 elections. Both belong to the pro-Iran Al-Dawa party, which is headed by Al-Maliki. The latter had hoped to continue to run things after he was appointed vice president. Even after his ouster he still controls 93 seats in the parliament.
But Al-Abadi soon realized that Iraq was on the brink of collapse as a result of sectarian divisions, rampant corruption, failing public services, poor relations between Irbil and Baghdad, ill-trained army and the looming threat by Daesh. For him to rally the Iraqi people behind him he had to demolish Al-Maliki’s legacy of corruption and sectarianism. The public protests provided him with an opportunity.
But Al-Abadi must brace himself for a backlash, especially from influential behind-the-scene players. The question is can he carry out his reforms agenda to the end? The fact that religious Shiite parties are divided may help him in the short run. He has the backing of Al Sistani and the charismatic cleric, Muqtada Al Sadr, among others. But the biggest challenge will be to restructure the judiciary if his pledge to hunt down and prosecute corrupt officials is to be taken seriously.
Al-Maliki is already fighting back. He has important influence over the Shiite militias, the Popular Mobilization, who are supporting the army’s campaign to liberate Al-Ramadi and Fallujah in Al-Anbar province from Daesh militants. The militias have been accused of committing atrocities against the Sunnis and are being led by Iranian advisers.
For Al-Abadi to succeed he must first win the confrontation between pro-Iran factions, under Al-Maliki, and the nationalist flank that is supported by the Supreme Iraqi Islamic Council and the Sadri movement and backed by Shiite clerical authorities in Najaf. The outcome of this showdown could determine the future and integrity of Iraq.
Article Ends
Today’s News
Today is Friday August 28th and still we have no news of an RV, nor will there be a window for one at least until mid September when they hold the PTB hold the next review of Dr Abadi’s progress, as was planned for in the last Paris Conference in June. I am not saying an RV in mid September so please do not put words in my mouth.
But I will say there is just so much progress being made in Iraq I hardly know where to start telling you about it today. This is very apparent by all the news articles I bring to you today. Don’t want to read the articles? Then how will you know what is truly going on in Iraq. Oh- you have a secret government contact. Really? He is bringing you all the news you need and its going to RV this weekend. Really? So tell the news then and why you feel it going to RV this weekend.
Many of you might think some of this news is gloomy but then again is the glass half full or half empty?
I tend to look at it this way – We had to bear the Maliki gloom and doom, the stalling and procrastination over the last eight years of the Maliki administration. There were days when only a third of the members of parliament showed up for a session. Now at least someone (the new prime minister Abadi ) is shaking things up and the status quo has definitely been changed. The pendulum is swinging in the other direction now and Iraq now has much more momentum in the right direction.
How long will it take to get to the end of these reforms? At least long enough for them to complete the currency reforms we are waiting for. Who knows for sure but we do know this week they have told us they would like to put the dinar on a currency float and at least are considering it seriously with all the pros and cons of the subject matter. WOW !
They are also telling us that money laundering and corruption in regards to the currency float is the major obstacle. WOW !
They have passed the Parties Law this week (amazing! ) and they are pushing aggressively towards the Judicial Reforms next week, the National Guard Law (maybe tomorrow). We know by passing the Parties law anyone alleged of criminal activity (or under investigation) can no longer hold office or receive immunity. This is HUGE for insuring the downturn of Maliki.
I personally feel once we get these other laws passed we will see the Federation Council announced and the official announcement of Dr Allawi as the president of it. You see there will then be 4 presidents residing in Iraq. We are seeing right before our eyes this new government take shape.
We heard about this money laundering years ago too and so on the surface this is nothing new to us. Supposedly Dr Shabibi maintained a steady dinar value and found ways to stabilize the currency, fighting the laundering was part of the process. But it was always an ongoing battle. When he sucked in the 3 zero notes he seemed to be able to control it but this problem keeps resurfacing. Why?
But this time it is different. A new spin is being taken to the anti-corruption process of money laundering. There is now support from the government (GOI) this time. How is this any different from the past?
Well in the past the CBI could not get any support from the Maliki administration to combat money laundering.Why? BECAUSE IT WAS HIS PEOPLE DOING THE MONEY LAUNDERING! He stood to make billions.
This week the CBI is also telling us there is plans for a near future bond drive, that will be issued to raise capital for the economic crisis and try to balance the budget. Iraq needs funds in local currency and not in hard currency, so the central bank is preparing to launch bonds in local currency for sale in order to strengthen the local currency.
These are NOT international bonds but are to be sold within country only meaning “nationally” sold bonds. So don’t get carried away and put on your RV glasses as of yet.
How will the Iraq citizens pay for these bonds? They will pay for them using the large 3 zero notes, thus the CBI will suck in yet more of the provisional currency. The CBI told us they have a surplus of foreign currency (US dollars) so they will pay out the premiums on the bonds in US dollars. What other foreign currency does the CBI have in surplus? What other foreign currency do they dare introduce to the Iraqi citizens?
US Dollars of course is the only logical choice since they country is all but re-dollarized once again anyhow.
This is good since then eventually, when the lower denominations come out, they can exchange the US dollars (now almost 80-90% of Iraq currency) for the lower denominations, thus flooding Iraq with hard Iraqi lowe denom dinars with higher revalued currency (when the timing is ready).
Since money laundering is ramped for the old 3 zero note dinars, the CBI is telling us this will get yet even more of these large 3 zero notes off the streets, out of corrupt hands and back to the CBI. A win win for the country of Iraq in the process of currency reform. Thus will also help eliminate or lessen the money laundering of the dinar. They have done this tactic in the past too and it always seems to work.
But they also need now to clean up the cause of the corruption or it will only begin again once the new lower denoms are out on the streets and is traded INTERNATIONALLY. This would be a HUGE problem. So do you see how this combating money laundering is yet another one of Abadi’s reforms but not just a tactic for the CBI but also now a GOI reform since this time they want to clean up also the ROOT OF THE PROBLEM. No temporary fixes.
This time they also expect the CBI’s plan to clean up the money laundering it to work but there is a difference spin in it. The difference now comes since they know the ROOT CAUSE, the three ring leaders (referred to as the “three whales” or “kings of the market”) of the money laundering. Oh no! They are actually political figures? Does this surprise you?
Abadi is going after these three political figures on money laundering charges. Will Iran like this? Will this also shake up Iran? Maybe this will lessen the continuance of these corrupt practices when they are prosecuted and used as an example. This money laundering HAS TO STOP. Iranian influence HAS TO STOP.
So why is money laundering so important all of a sudden?
Do they want billions of dinar going into the wrong hands when the value increases? Is the RV then dependent on this part of currency reform? Do you get my point?
Are the reforms then important? Are you kidding me? YES, YES and YES again…..I rest my case….
So can we all now agree to stop this frugal argument between intel providers in our community once and for all and at least come to mutual agreement on this subject matter?
NO REFORMS NO RV….GET IT ?
So here are the many articles today on all of these topics I have just talked about above in my summary for you. I included them for all those bozo the clown intel gurus who seem to call me crazy and a liar. Read them for yourselves since they are not my words but the words coming from Iraq itself. No RV hype, just the facts. Plain and simple !
Article Follows:
How a Currency Crisis in Iraq Risks Fight Against Islamic State (Bloomberg)
Falling oil price is reducing revenue used to fund military.
Dollar reserves have tumbled 20 percent as dinar weakens.
Any currency crisis usually comes with dire consequences for a country, and the threat of one in Iraq shows how the impact can go beyond the economy and markets.
A foreign-exchange crunch because of a drop in oil prices could force a devaluation of the dinar and risk making the fight against Islamic State militants even tougher. The nation, currently OPEC’s biggest producer after Saudi Arabia, is dependent on oil revenue to fund its operations on the battlefield and quell growing unrest over the economy.
Iraq's Looming Dollar Shortage
Dollar reserves tumbled about 20 percent to $59 billion as of July 23 since the fighting escalated a year before, and the losses are accelerating. In the first 25 days of August, the central bank sold $4.6 billion of currency to keep the dinar at a pegged rate, a daily outflow of about $184 million, data compiled by Bloomberg show.
“Iraq’s perfect storm means the country will continue to lose reserves until the government of Iraq decides to devalue the dinar,” said Frank Gunter, author of “The Political Economy of Iraq.” The currency could weaken as much as 20 percent over the next year, he said
Global Wave
It raises the prospect of Iraq joining other developing nations in a new wave of devaluations as emerging markets take a hammering this month, led by China. The Iraqi dinar is one of those most at risk in the Middle East from that happening, though the current exchange-rate regime is likely to remain, according to research published on Tuesday by Emirates NBD, the biggest bank in Dubai.
Saudi Arabia’s central bank this week said it’s committed to the riyal’s dollar peg, the Saudi-owned Al Arabiya television reported, amid speculation the country would devalue its currency after the plunge in oil prices.
In Iraq, market forces are complicating Prime Minister Haidar al-Abadi’s efforts to win back territory from Islamic State. Military success has been piecemeal as the government has struggled to enlist support from mainly Sunni communities in parts of the country ravaged by attacks.
The U.S. and its allies have sent arms to the Kurds in northern Iraq and PresidentBarack Obama’s administration plans to spend another $700 million in 2016 on support for the military. The government in Baghdad, though, pays for the bulk of the operations from its budget since the Americans pulled out their troops in 2011.
Selling Dollars
A collapse in the value of the dinar would raise the cost of living for Iraqis already protesting against government corruption, power cuts and water shortages.
“The policy now is to meet the demand for dollars,” Waleed Eedi, a director general at the Central Bank of Iraq, said by telephone on Monday. The reserves won’t be depleted because of oil sales and the dinar won’t devalue, he said.
The Iraqi central bank’s fixes the dinar’s exchange rate at 1,166 per dollar and there’s pressure on the peg. As a result, Iraq’s foreign-currency reserves may drop to about $45 billion by the end of 2016, according to Exotix Partners LLP, a London-based investment firm specializing in frontier markets.
“The authorities will try to hold on to the peg as long as possible, but may be forced to devalue if pressures continue,” said Jakob Christensen, a director at Exotix.
Few Choices
The central bank has so far resisted government pressure to print money to meet an estimated $30 billion budget deficit. It announced plans for a $6 billion bond program last week, which follows about $1.2 billion from the International Monetary Fund, though neither is big enough to plug the shortfall.
Iraq's Oil Economy
That leaves the Finance Ministry with few easy choices. The government is seeking to cut spending and tackle corruption. Other options include borrowing domestically from public banks or even forcing the central bank to buy dollar-denominated bonds from the Finance Ministry, said Gunter.
“Iraq will be able to finance its 2015 deficit, but if the battle against Islamic State and low oil prices continues, Iraq will then hit a wall,” he said.
Article Ends
Soon Link to PART 2
It raises the prospect of Iraq joining other developing nations in a new wave of devaluations as emerging markets take a hammering this month, led by China. The Iraqi dinar is one of those most at risk in the Middle East from that happening, though the current exchange-rate regime is likely to remain, according to research published on Tuesday by Emirates NBD, the biggest bank in Dubai.
Saudi Arabia’s central bank this week said it’s committed to the riyal’s dollar peg, the Saudi-owned Al Arabiya television reported, amid speculation the country would devalue its currency after the plunge in oil prices.
In Iraq, market forces are complicating Prime Minister Haidar al-Abadi’s efforts to win back territory from Islamic State. Military success has been piecemeal as the government has struggled to enlist support from mainly Sunni communities in parts of the country ravaged by attacks.
The U.S. and its allies have sent arms to the Kurds in northern Iraq and PresidentBarack Obama’s administration plans to spend another $700 million in 2016 on support for the military. The government in Baghdad, though, pays for the bulk of the operations from its budget since the Americans pulled out their troops in 2011.
Selling Dollars
A collapse in the value of the dinar would raise the cost of living for Iraqis already protesting against government corruption, power cuts and water shortages.
“The policy now is to meet the demand for dollars,” Waleed Eedi, a director general at the Central Bank of Iraq, said by telephone on Monday. The reserves won’t be depleted because of oil sales and the dinar won’t devalue, he said.
The Iraqi central bank’s fixes the dinar’s exchange rate at 1,166 per dollar and there’s pressure on the peg. As a result, Iraq’s foreign-currency reserves may drop to about $45 billion by the end of 2016, according to Exotix Partners LLP, a London-based investment firm specializing in frontier markets.
“The authorities will try to hold on to the peg as long as possible, but may be forced to devalue if pressures continue,” said Jakob Christensen, a director at Exotix.
Few Choices
The central bank has so far resisted government pressure to print money to meet an estimated $30 billion budget deficit. It announced plans for a $6 billion bond program last week, which follows about $1.2 billion from the International Monetary Fund, though neither is big enough to plug the shortfall.
Iraq's Oil Economy
That leaves the Finance Ministry with few easy choices. The government is seeking to cut spending and tackle corruption. Other options include borrowing domestically from public banks or even forcing the central bank to buy dollar-denominated bonds from the Finance Ministry, said Gunter.
“Iraq will be able to finance its 2015 deficit, but if the battle against Islamic State and low oil prices continues, Iraq will then hit a wall,” he said.
Article Ends
Soon Link to PART 2
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