DINAR IRAQ AND DONG VIETNAM UPDATE, 9 AUGUST

by **Ponee** Mon Aug 09, 2021 10:18 pm

Tohme: We reject the government’s approach to borrowing from the International Monetary Fund and warn of its severe damage
Sunday August 8, 2021 | 01:43 PM
Tohme - We reject the governments approach to borrowing from the International Monetary Fund and warn of its severe damageThe head of the National Nahj bloc, Ammar Tohme, confirmed today, Sunday, his rejection of the government’s approach to borrowing from the International Monetary Fund, while warning of its severe damage to the country.
Tohme said in a statement, “We reject the government’s tendency to borrow four billion dollars from the International Monetary Fund, especially since the Minister of Finance announced that he did not expect to obtain the loan until the end of this year, and the set of data below shows the error and harm of this approach:-
1. The total revenues in excess of what is fixed for the selling price of Iraqi oil in the budget amounted to more than (7,7) billion dollars during the first six months of the current year, which is more than the amount of borrowing assumed by (3.7) billion dollars.
2. The association of such loans with harsh conditions shackles the Iraqi economy and restricts its programs to result in steps that are harmful to the general Iraqi citizens and subject the economic decision to a strange and incompatible approach with the Iraqi situation, such as raising the dollar exchange rate.
3. The serious approach to collecting non-oil federal revenues from its many sources (ports, mobile phone companies alone) will provide four times the amount that is supposed to be borrowed.
4. The pressure of unnecessary government expenditures, which are hidden in general and vague headings, weakening the control over their detection and monitoring.
5. Correcting the contracts of the Ministry of Electricity with investors who represent economic fronts for influential political parties will save several trillion dinars annually.
6. Taking courageous national decisions on the issue of oil licensing rounds, whose annual cost averages 15 trillion dinars, as well as the issue of contracts in the Kurdistan region with foreign and unfair companies against Iraq and its economy.
With the same justifications above, we reject what the Minister also announced that the government, in cooperation with the Central Bank of Iraq, will issue government bonds amounting to (1,5) trillion dinars, equivalent to approximately (1) billion dollars.
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THE NEWS THIS PERIOD IS ALL ABOUT THREE ISSUES:
1. About the “White Paper” economic reform plan, and that the government is implementing its provisions.
We know that a couple of the provisions in the white paper are to stop the currency auctions and to finally complete the change over to the newer lower denomination (project to delete the zeros).
But what we do not know is how long it will take them to do it.
They did tell us the existing rate will remain to at least the end of this year.
Is this a hint that maybe they are considering something in January 2022 as we know this is the best time to do a major revalue and reinstatement?
But we can only speculate at this point and sit back and watch the fireworks over the October elections as we know there is always chaos and corruption during these elections.
I will say this that if the Dawa party gets back in forget anything good for Iraq for a very long time, if ever.
2. Major Election issue: Changing the exchange rate of the Iraqi dinar (devaluation or revaluation) in the election campaign for 2021 October elections has taken a forefront in the political arena in Iraq.
To the many of the candidates running in the election a revaluation may be the ticket to be elected.
However, I want to caution everyone reading my comments today. When I say revalue the dinar or changing the rate of the dinar back to the old rate, I mean that they will back-off from the devaluation of Dec 2020 and go back something close to what it was prior to this move.
I do not mean a major revaluation including the project to delete the zeros and a reinstatement, as least not now.
3. Implementing the 2021 budget: The government must implement the four paragraphs of the budget law that pertain to the Kurds, and there are some political forces that confirm that the region must be clear in its mechanisms for all, and it is unreasonable for the budget provisions to be implemented in a way other than its legal framework.
Also they must allocate the funds out to the projects.
But do they really trust the ministers and the elected officials in those districts?
Will the money just disappear again like it has in previous years?
We will get an RV soon (the one we all want as investors)?
The closest date we can project out is January 2022.
There are some subtle hints from the CBI that they are working towards this date for a big change in the rate of the dinar.
But with the increase in oil production and the price of oil rising enormously the VALUE in the dinar is REAL and not reflected in the currency rate.