Tman23 says A revalued currency is an immediate solution

tman23 


   From 2004 to present Iraq has not had "The HCL".  So for the past 11 years Iraq has never opened a Budget.  They were operating on WHAT?   The FACT is 2014 operated on 1/12 system of the 2013 Budget because Parliament did not pass a budget.  2015 Parliament passed a Budget but "austerity measures" were put into place because of  "lack of liquidity" due to ISIS, war costs, displaced persons, fallen oil prices, etc....NOTHING TO DO WITH HCL!!!  They cannot implement the full version of the 2015 Budget because there is NOT ENOUGH MONEY!!!

To open the Budget they need liquidity...to achieve liquidity they can open the free market...but Rome was not built overnight nor will Iraq, the market takes time to develop and since infrastructure is in poor shape it is not an immediate solution.  A revalued currency is an immediate solution...since Iraq deals in petro dollars...a IQD equal to 1 usd changes nothing...a IQD valued at $3 provides Iraq international purchasing power...so they can get 3 times the amount of imports as what they do now with a higher valued currency... low value favors countries that do large exporting...High value favors countries who do importing...Iraq imports over 90% of their goods... If they revalue at at $3... They spend $1 on imports and have $$$ to pay salaries and invest.

A RV changes nothing. if oil is selling at $60/bbl now, that is the equivalent of approx 70K dinar. If it RVs to 3/USD, it would be selling for the equivalent of 20IQD/bbl. Conversely that item that costs 116K IQD would then cost approx 33 IQD. It's a wash, value of a currency does not effect liquidity. Liquidity is developed by selling more than you spend.

The budget has been open, they have been spending according to the budget, borrowing as necessary to cover the deficit caused by low oil prices. It has nothing to do with liquidity and everything to do with quantity and value of their main export... IDIOT!