Tuesday, September 24, 2024
What more do you want to hear except maybe that it is done :) BY MNT GOAT
IRAQ PLANS CURRENCY REDENOMINATION AMID ECONOMIC CHALLENGES
The Central Bank of Iraq (CBI) has announced that discussions regarding the project to remove zeros from the Iraqi dinar are ongoing, with assessments continuing. The bank also noted a reduction in reliance on the US dollar for trade transactions. Ali Mohsen al-Alaq, Governor of Iraq’s Central Bank, stated that the bank is facing global economic challenges, such as rising energy and raw material prices.
To address these issues, it has amended some monetary policies in line with the international situation, aiming to increase confidence in the Iraqi dinar and prevent a significant decline in its value.
The central bank has also increased its holdings of foreign currency and gold reserves to enhance the country’s financial stability and its ability to cope with economic crises in any situation, he added.
Many countries remove zeros from their currencies to revalue the national currency and facilitate financial transactions. This process involves eliminating a certain number of zeros from the nominal value of the currency, making it less inflationary and more stable.
Earlier this year, the Iraqi federal government decided to postpone a plan to remove three zeros from the nominal value of its currency notes, citing that the current economic climate was not suitable.
Last year, the central bank indicated plans to redenominate the Iraqi dinar to simplify financial transactions in an economy that remains heavily centralized and oil-dominated, where deals are often conducted in cash.
(What more do you want to hear except maybe that it is done…. 😊)
EXCERPTS : "NOW THE CBI HAS DECIDED TO DO IT THIS FALL" BY MNT GOAT, 24 SEPT
Let’s start with an interesting article titled “IRAQ PLANS CURRENCY REDENOMINATION AMID ECONOMIC CHALLENGES“. My goal today is to show you that this is just not another article about the Project to Delete the Zeros but much, much more. I also want to show you that I believe this project is going to move forward this fall, and I am told not until after the US election.
.....It is September and if you recall my CBI contact told us the committee was planning to begin the roll out of the currency swap out in November. Then the article went on to say and I quote – “To address these issues, it has amended some monetary policies in line with the international situation, aiming to increase confidence in the Iraqi dinar and prevent a significant decline in its value.” Is this not one of the main reasons for the Project to Delete the Zeros?
Okay, so here are the real goodies in this article. I quote again – “Earlier this year, the Iraqi federal government decided to postpone a plan to remove three zeros from the nominal value of its currency notes, citing that the current economic climate was not suitable.” Earlier this year? Is it suitable now? Is this what they are telling us? Did you read it? All I can now say is “I told you so”.
Yes, just as I was telling you that they planned to do it in June but for reasons they postponed the process. The US Treasury decided to stop it and we know the rest about the banks and the corruption that we read. Now the CBI has decided to do it this fall....
DINAR REVALUATION REPORT: Iraq's Financial and Banking Reforms Progress in 2024, 24 SEPT
Iraq's Financial and Banking Reforms Progress in 2024
Iraq's Prime Minister, Mohammed Shia Al-Sudani, has highlighted the significant strides made by his government in the financial and banking reform sector. During a meeting with US Deputy Treasury Secretary Wally Adeyemo and several Treasury officials, Al-Sudani emphasized that the government has achieved substantial progress in these reforms, with 95% of banking transfers now being conducted through an electronic platform. The remaining 5% is expected to be completed by the end of the year.
Following this milestone, Iraq will transition to a correspondent banking system, aligning with the government's commitment to enhancing the capacity of Iraqi banks to meet global standards and foster a thriving investment environment.
Adeyemo praised Iraq's rapid progress in economic and banking reforms, noting the country's 6% economic growth rate, which complements the government's development efforts. He expressed the readiness of the US Treasury for cooperation and partnership to further advance Iraq's economic development.
Challenges and Future Directions
Despite these advancements, Iraq still faces challenges in diversifying its economy and modernizing its financial and banking sectors, which are hampered by the country's political dynamics. Oil remains the primary source of revenue, and the private sector and foreign direct investments (FDIs) remain weak.
The World Bank has been working closely with Iraq to support economic reforms, with a focus on stabilizing the economy, improving governance, and rebuilding livelihoods. The World Bank identified an error in the reporting of Iraq's debt data for 2022, correcting the debt-to-GDP ratio from 53.8% to 40.8%.
The International Monetary Fund (IMF) has also recognized the need for Iraq to reduce its oil dependence and ensure fiscal sustainability. The IMF suggests a significant fiscal adjustment, focusing on controlling the public wage bill and increasing non-oil tax revenues. Additionally, enabling private sector development, labor market reforms, modernization of the financial sector, and restructuring of state-owned banks are recommended to boost economic growth.
Conclusion
Iraq's financial and banking reforms have seen significant progress under Prime Minister Al-Sudani's leadership, with substantial support from the US Treasury. However, challenges remain in terms of economic diversification and fiscal sustainability. The World Bank and IMF's recommendations underscore the need for continued reform efforts to strengthen the banking sector, control public spending, and increase non-oil revenues.
STATUS OF THE RV BY MNT GOAT, 24 SEPT
STATUS OF THE RV
If you remember in my last Newsletter Iraq we talked about the Project to Delete the Zeros. What did I say at that time? I made reference to and article by the Iraqi economist Yasser Al-Mutawali who asked the question to the Finance Ministry and to the general public – “Is It Time To Remove The Zeros” ? So, today we explore this topic again. Why? Read on……
Today’s news is all WOW! WOW! and yet more WOWs. Keep in mind as you read my commentary today that we have been told many times that the Project to Delete the Zeros is not just a common project to redenominate but for Iraq it is also a steppingstone as part of the process to the reinstatement. This is the reason why I am so captivated on what just happened these last few days.
So what did happen? We witnessed another onslaught of articles about the Project to Delete the Zeros once again. Remember the past when we didn’t hear anything for years and then in July 2023 the CBI reminded us about the project again. Then again just a couple weeks ago many of the economist talked about it again. And now again in the past few days. But why now? Why again? Sometimes the news from Iraq is repeated but it is the timing and reasons behind it that are important. Remember the news media reports what is going on in Iraq so someone, something must have reignited the spark for the Project to Delete the Zeros. Was it the CBI?
Yes, it was the CBI and when the CBI talks, I listen. All the economists have opinions, as factual as they may be, they are still just opinions. But the CBI sets monetary policy. Get it?
Let’s start with an interesting article titled “IRAQ PLANS CURRENCY REDENOMINATION AMID ECONOMIC CHALLENGES“. My goal today is to show you that this is just not another article about the Project to Delete the Zeros but much, much more. I also want to show you that I believe this project is going to move forward this fall, and I am told not until after the US election.
In this article they state, and I quote – “The Central Bank of Iraq (CBI) has announced that discussions regarding the project to remove zeros from the Iraqi dinar are ongoing,” Oh…. but we already knew that, didn’t we? But here is the important part. It is the timing of all these articles yes, there were many articles on this topic this period of news. It is September and if you recall my CBI contact told us the committee was planning to begin the roll out of the currency swap out in November. Then the article went on to say and I quote – “To address these issues, it has amended some monetary policies in line with the international situation, aiming to increase confidence in the Iraqi dinar and prevent a significant decline in its value.” Is this not one of the main reasons for the Project to Delete the Zeros?
Okay, so here are the real goodies in this article. I quote again – “Earlier this year, the Iraqi federal government decided to postpone a plan to remove three zeros from the nominal value of its currency notes, citing that the current economic climate was not suitable.” Earlier this year? Is it suitable now? Is this what they are telling us? Did you read it? All I can now say is “I told you so”.
Yes, just as I was telling you that they planned to do it in June but for reasons they postponed the process. The US Treasury decided to stop it and we know the rest about the banks and the corruption that we read. Now the CBI has decided to do it this fall. This is why they occupy an entire floor in the CBI. The reasons are really two-fold: 1. One is to help reform their banking system to allow them to do it and 2. the other is to be onboard to assist in the actual swap out. You will not see the US Treasury leave the CBI until this is done and the Project to Delete the Zeros (swap out) is completed.
Another piece of the puzzle also surfaced in this article and I quote -“Last year, the central bank indicated plans to redenominate the Iraqi dinar to simplify financial transactions in an economy that remains heavily centralized and oil-dominated, where deals are often conducted in cash.“So, what the CBI is saying is that they reminded us that last year they indicated plans to do it and this year they are going forward with it. This is what I get out of this article. You can go read it in the Articles Section of today’s Newsletter. What do you think? But I also have to add what my CBI contact told us and so there is also another verification too of this article that what I think most likely is the correct thinking. You see, I don’t go by rumors, bullshit bank memos or someone being put on alert in an exchange center… bla, bla, bla …. as all these so-called intel gurus will tell you. I go by FACTS and only the FACTS. Get it?
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