IMF Stand By Agreement

Here is the link that supports the post that apperared on Recaps. You may need to copy and past it into your browser.

I believe that one of two things will happen on or before the end of July.

1) We will see an RV of the currency. 2) Another extension will be given (12, 24 or 36 months) Notice that the current

agreement is set to expire in July of 2012

The authorities remain committed to continue to move forward with the implementation of the
reforms and therefore also request an extension of the SBA to mid-2012 to allow for more time
for their completion, as well as to underscore their commitment to maintain sound economic
policies while ramping up investment in public services and infrastructure.

http://www.imf.org/external/pubs/ft/scr/2011/cr1175.pdf

Robin Inspector & Auditor For USGov In Iraq - Post By Leo GET Forum 04/15/2012

DT 4-15-2012 Robin: I was an Inspector and Auditor for the US Government over in Iraq, overseeing the money being spent to rebuild the country, investigating financial matters, and writing reports to the US Congress.

I lived and worked in the Baghdad Embassy a long time. My friends there helped establish the financial and banking system in Iraq.

I believe in Iraq, the future economy and I believe in the people of Iraq and their long term prosperity; but investment in Iraq currency, or the stock market, should be treated as a long term investment.
...
Read More Link On Right


_ The Iraq Dinar will not, or was it ever, going to revalue until the agreement with the International Monetary Fund (IMF) comes to a close and new agreement issued.

The stability of the Iraq currency is essential, per the agreement, for the long term development of the banking sector and private financial and business markets within Iraq.

The World bank and the IMF are overseeing the long term structure building of Iraq's economy, and the stabilization of the currency is key.

Also critical, per the agreement, is the independence of the Central Bank of Iraq (CBI) from the government. The CBI is solely responsible for any decision related to banking and currency.

The agreement is called the "Stand By Agreement" (SBA) and is between the Iraq Government, the Central bank of Iraq and the IMF.

The Agreement has been extended to July 24, 2012. The SBA is extended until July 24, 2012. What happens then is up for prayer. Much depends on the growth and development of the banking structure and financial markets.

A quick (OK very quick) read does not show any indication that the SBA will or will not have any effect on the RV. I did find the following:

The CBI will continue to strengthen the management of its international reserves in line with the adopted reserves management guidelines. The CBI will follow the guidelines to diversify currency composition and establish an appropriate duration and credit risk profile, and build capacity for risk analysis.

We have worked with IMF staff
to complete the review of exchange laws and regulations and are considering measures to remove the identified exchange restrictions on current international transactions. We remain committed to avoid imposing any restrictions on the making of payments and transfers for current international transactions or introducing any multiple currency practices.

It does state the following under definitions:

For purposes of monitoring under the program, a program exchange rate will be used. This program exchange rate will be set at ID 1,170 per U.S. dollar. The program exchange rate will be used to convert into Iraqi dinars the U.S. dollar value of all CBI foreign assets and liabilities denominated in U.S. dollars, as required. For CBI assets and liabilities denominated in SDRs and in foreign currencies other than the U.S. dollar, they will be converted in U.S. dollars at their respective SDR-exchange rates prevailing as of December 31, 2010, as published on the IMF’s website.

That could support the claims of Robin, and in fact certainly seem so, I found nothing however that would prevent termination of the agreement at any time.

I did note that this was a 2 year agreement signed in February of 2010, and it was indeed extended to July 2012:

Two-year Stand-By Arrangement (SBA) in the amount of SDR 2.38 billion
(about US$3.8 billion), approved by the IMF's Executive Board on
February 24, 2010. The IMF's Executive Board completed the first program
review on October 1, 2010, and the second review on March 18, 2011,
bringing the total resources currently available to Iraq under the
arrangement to SDR 1069.56 million (about $1.7 billion). At the time of
the second review, the program duration was extended by five months to
July 2012, along with a rephasing of program disbursements based on a
shift in financing needs from 2010 into 2011.

http://www.imf.org/external/np/country/notes/iraq.htm

The rest of the article is encouraging ... most of all in that it seems like despite the challenges the economy appears to be healthy. NB this info is a year old, and so may have been superseded by events.

I saw no indication where it requires them to wait until the 24th of July to start a new agreement, they can just as easily amend it, or draw up new papers voiding this at anytime.

Again it doesn't say they have to wait til then. IMO can happen at anytime, could have already happened and we don't know about it.