Pimpy
I just read an article not that long ago that said oil sales are now 89% of their budget which is good. Remember it was 96% of their budget...Iraq is going in the right direction but they still rely on oil sales way too much...
If Iraq starts stumbling and the prices drop low for oil per barrel then they start operating in the deficit...If it keeps dropping and gets too low then they're going to have no choice but to...devalue the Iraq dinar...
No body said they're doing it. I'm just saying we really got to pay attention to the price of oil per barrel because if it gets too low they don't need to tell us what's going to happen, you should already be aware that's what they're going to do...
Pimpy
I'm not saying they're going to devalue the currency right now.
What I am saying is if they stay below $70 [per barrel of oil] for the medium term, you can see them devalue the currency. I don't think it's going to happen anytime this year because the year is almost over.
I'd be a little nervous going into 2025.
PIMPY CC NOTES HIGHLIGHTS: "THE NECESSARY STEPS FOR IRAQ TO REINSTATE THE DINAR RATE AT $3.22" BY PIMPY, 16 SEPT
Summary
Pimpy discusses the necessary steps for Iraq to reinstate the $3.22 dinar rate, emphasizing economic reforms and stability.
Highlights
- 💼 Monetary Reforms: Iraq needs comprehensive monetary reforms to stabilize its economy.
- 💵 Currency Basket: Adopting a basket of currencies will reduce reliance on the US dollar.
- 🚜 Economic Diversification: Iraq should diversify beyond oil to strengthen its economy.
- 📈 Foreign Investment: Attracting foreign investment is crucial for economic recovery.
- ⚖️ Political Stability: A stable political environment fosters confidence in the dinar.
- 📊 Inflation Control: Monitoring and controlling inflation is essential for maintaining currency value.
- 🏦 Engagement with Institutions: Collaborating with international financial institutions can support necessary reforms.
Key Insights
- 💡 Monetary Reforms: Implementing monetary reforms, including deleting zeros from the currency, can help restore public confidence and stabilize the economy. This is a long-discussed yet crucial step for Iraq’s financial health.
- 🌐 Currency Basket: By adopting a currency basket system, Iraq can mitigate risks associated with dollar fluctuations, providing a more stable foundation for international trade and enhancing economic resilience.
- 📉 Economic Diversification: Reducing oil dependency is vital. Recent agreements with Turkey on agriculture infrastructure can potentially boost Iraq’s agricultural sector, indicating a step towards diversification.
- 📈 Foreign Investment: Iraq must create a favorable environment for foreign investors through regulatory reforms, which is essential for economic growth and stability.
- 🔒 Political Stability: Ensuring political stability is key to building trust among citizens and investors alike, which will lead to increased usage of the dinar over foreign currencies.
- 📉 Inflation Control: The Central Bank’s role in controlling inflation through effective monetary policy is vital for maintaining the dinar’s value, currently facing a 5% inflation rate.
- 🤝 International Engagement: Collaborating with organizations like the IMF can provide Iraq with guidance and financial support to implement necessary reforms, aiding in achieving its monetary goals.
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