Deal or Buy Dinar Reviewed
You may have heard a lot of news about the Stand-By Arrangement for Iraq but, were you aware of how it will affect Iraq’s economy and the banknotes that you have been holding for years? This (I think) is the right time to clarify heresy and to give peace of mind. Where are we really heading prior to our Iraqi Dinar investment?
SBA (Stand-By Arrangement for Iraq) helps
It was on February 24, 2010 that Iraq filed a program, was approved, and called it a two-year Stand-By Arrangement in the amount of SDR 2,376.8 million or about 4 billion USD. This served as the country’s temporary budget support to ensure macroeconomic stability because during that time, the country was struggling to reconstruct the severe damage it had in 2003 US war and the decline of oil prices in 2009. In other words, the country owed the Executive Board of the International Monetary Fund for structural reforms while there was political transition.
Indeed, the temporary budget helped the country greatly that it was able to slowly provide framework for structural reforms and was able to entice foreign investors. However, this program, as it was named, was due only for two years from the time it was approved by the Executive Board. In short, Iraq ran out of time to pay the large deficit it had for over two years. As a matter of fact, the SBA had been scheduled to expire on July 23, 2012. Did the country failed to comply their liabilities with IMF? If the country failed to comply, this would greatly damage the value of our notes as the country would be struggling to operate under a very large deficit which is twice than their quota.
Fortunately, IMF approves the Seven-Month Extension
As it had been requested by Iraqi authorities, IMF approved the Seven-Month Extension of SBA. This will provide the country’s authorities to implement reasonable policy measures necessary to complete the combined third and fourth reviews under SBA.
In other words, the seven-month extension of Iraq’s SBA will give the country an extension up to February 23, 2013. The said extension will give Iraq the time to thoroughly discuss fiscal policies and to improve the current functioning of the exchange regime. So, our beloved Iraq will no longer bound to go broke unlike what other negative people have been projecting. Iraqi dinar will be given the extended opportunity to grow and be strengthened even more as the country continues to produce billions of oil barrels per day. This granted extension will help Iraq to focus on releasing its most anticipated new currency by January of 2013. As of this moment, according to International Monetary Fund, the total resource available to Iraq under the arrangement is equivalent to SDR 1307.24 million or around 1.96 USD.
To buy or not to buy
Not all people are happy about the IMF’s decision because for them, this might only cause a larger deficit for the country. Although, some of Iraq’s economy experts have released their views on the future of dinar, a number of people remained speculative.
However, how will this affect the current trading price of Iraqi dinar? Will it really make a significant difference to the current Iraqi authorities if IMF has approved the seven-month extension? The Executive Board of the International Monetary Fund has just landed another challenge (if not an opportunity) to Iraqi officials. If IMF has granted this extension, the Kuwait debt might compromised or the other way around. Whatever the decisions Iraqi leaders have in mind or whatever IMF plans for the extension of the large debt, only one question remains: Will you deal or buy dinar?
Written by http://www.DrDinar.com
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