IMF Loans

by great199 Tue Jan 26, 2016 10:49 pm

Hi I just wanted to say I saw an article regarding the 1.2 billion dollar loan the IMF gave Iraq recently. It stated that the loan was in SDR's equaling said amount U.S. In my opinion much better news than just a straight up loan. They are filling Iraq's SDR basket! China just joined a basket for the first time themselves.

by **Kevind53** Tue Jan 26, 2016 11:38 pm

Sorry, not so, SDRs are essentially just an accounting tool. They can be drawn out using any of the reserve currencies, which typically means USD. There is no basket to fill, all the basket refers to is the formula which the IMF uses to determine the value of one SDR. The currencies in the basket are weighted, at this time, it is 41.9% USD, 37.4% Euro, 11.3% Pound Sterling, and 9.4% Japanese Yen. The Chinese Renminbi will be added to the basket effective October of this year. The exact makeup has not yet been released to my knowledge, but it expected to be somewhere around 10%. A good explanation of SDRs can be found here: http://www.imf.org/external/np/exr/facts/sdr.htm

by great199 Fri Jan 29, 2016 12:19 am

Kevin I saw the article, I will find it I just misplaced it. It was very specific that the loan was in sdr equalling said amounts u.s. I know what I saw.

by great199 Fri Jan 29, 2016 12:28 am

On July 29, 2015, the Executive Board of the International Monetary Fund (IMF) approved SDR 891.3 million (about US$1.24 billion or 75 percent of quota) for Iraq under the Rapid Financing Instrument (RFI)¹. I could be wrong but it looks to read that they approved SDR WORTH A CERTAIN AMOUNT I would say it means they are at 75 percent of their total basket. But it does say they approved sdr's not dollars.

by great199 Fri Jan 29, 2016 12:29 am

https://www.imf.org/external/np/sec/pr/2015/pr15363.htm

by **Kevind53** Fri Jan 29, 2016 7:56 am

great199 wrote:Kevin I saw the article, I will find it I just misplaced it. It was very specific that the loan was in sdr equalling said amounts u.s. I know what I saw.

Yes they always are as the USD is the main reserve currency used in international trading.

by **Kevind53** Fri Jan 29, 2016 7:59 am

great199 wrote:On July 29, 2015, the Executive Board of the International Monetary Fund (IMF) approved SDR 891.3 million (about US$1.24 billion or 75 percent of quota) for Iraq under the Rapid Financing Instrument (RFI)¹. I could be wrong but it looks to read that they approved SDR WORTH A CERTAIN AMOUNT I would say it means they are at 75 percent of their total basket. But it does say they approved sdr's not dollars.

It does not mean that they are a part of any basket. Please read the link I posted about SDRs. It's a little long, but explains the whole process better than I can right now as I am heading out to work, and have a very busy weekend scheduled.

by **MarcusCurtis** Mon Feb 01, 2016 4:47 am

There is another very important point to this loan. Iraq's Foreign reserves are dropping. They had to give an account of this before they received the loan. I can tell you that this is not a good thing. They have been spending their reserves for a while now.

back in 2010 was when I originally got involved with this investment. Back then the central bank had a policy that their currency would be backed by their reserves 100 percent. As these reserves drop we can see that this is not the case.

In addition to this, a drop in reserves could very likely lead to another devalue of the currency. This is not good news. Don't take my word for it. Check the link
[url=http://www.reuters.com/article/iraq-imf-idUSL8N14W4Z920160112?rpc=401]Foreign reserves dropping to 43 billion[/url]