STATUS OF THE RV . PART. 3
What new event then will they migrate to and use to keep the hype going?
I hope all my blog readers can realize what is going on with these budget tables and the misperception after misperception of the importance of these tables and how they are used.
So, what the hell are these budget tables anyhow and why are they actually important to Iraq (not us investors)?
They are important because they represent how the money in the budget is to be distributed to the provinces for projects.
This is where the projects are outlined and budgeted for. Why in hell would they have an RV rate in them? The cost of these budgets is based on the price of a barrel of oil. This is the money flow of revenues for Iraq.
It still consists of 90% of their revenues. Yes, I do agree there are issues with still using this method of determining the budget funding since Iraq is now fully out of UN Chapter VII sanctions and it is time to change this process. What is taking them so long?
Yes, someday this process of how they determine the amount of money they can spend on the budget may change.
But for now, Iraq still uses the oil revenues (price of oil) to determine it. Remember Steve Forbes and his presentation I showed you in a couple of my more recent Newsletters? What did he tell us?
Forbes told us if you want to focus on the health of an economy (inflation and employment) do not go to the price of oil, instead you must focus on the stability of the currency. It’s all about the currency.
So, the entire idea of pegging the Iraqi dinar solely to the U.S. Dollar from oil sales is a major part of the problem with the stability of the Iraqi dinar.
Forbes is very specific about not using the price of oil to determine you economic growth. Get it? Using oil as a gauge is now the problem not the solution for Iraq. Yes, it may have been a temporary solution for Iraq during the sanctioned time. But not any longer. Those days are over.
This process has to change and the dinar has to get off this sole de facto peg to the U.S. dollar. This is the solution!
That is the only way out of this mess in Iraq. Just look at the parallel market and this is a very good example as to why the dinar must get off this sole peg.
They must go to a “basket of currencies” of developed countries as the IMF and the World Bank recommended for Iraq way back in 2011. In 2012-2013, the then director of the CBI, Dr Shabibi was going to revert to this basket of currencies which would have allowed the dinar to be reinstated.
Of course, his plan was first going to conduct the Project to Delete the Zeros.
