MilitiaMan and KTFA Members "Change is Coming" Sunday 9-13-2020

KTFA:

Samson:  The Minister of Finance and the US ambassador discuss strengthening mechanisms for economic and financial cooperation

13th September, 2020

Today, Sunday, Minister of Finance, Ali Allawi, discussed with the US Ambassador to Baghdad Matthew Toller the strengthening of the economic and financial cooperation mechanism.

The media office of the Minister of Finance said in a statement that Mawazine News received, a copy of it, that “Finance Minister Ali Allawi met today 9/13/2020 at a library in Baghdad with the US ambassador to Iraq,” pointing out that “during the meeting, mechanisms were reviewed and discussed. Strengthening economic and financial cooperation between the two countries."

For his part, the American ambassador affirmed his country's "full support for the plans and procedures that the Iraqi government is following, especially with regard to reforming and developing the economic and financial sector under the current circumstances."    LINK

MilitiaMan:  "A mechanism is a mathematical structure that models institutions through which economic activity is guided and coordinated. ... They seek to do so in ways that economize on the resources needed to operate the institutions, and that provide incentives that induce the required behaviors."

MilitiaMan:  The main focus I am seeing in this is now on the economic and financial mechanism to fully support the plans and procedures the GOI and COM are following with regard to the reforms.

We see that in other articles that are out lately that the reform papers and budgets are being talked about. They talk about not only the 2019, 2020 and 2021. They will not hopscotch around any of them They are to be in-sync and in order. They feed off each other.

The Finance Minister has shown the 2020 Draft to the parliament days ago. The draft has the exchange rate at a program rate, as it has been not voted on it yet, a not normal thing at all. But they tell us that the budget  can be changed or delayed. In other words the 2020 budget can be amended.

I believe there is support that it will be amended away from a program rate. Because, they are not able to borrow at a program rate or they would have already. They have exhausted all avenues with the IMF, WB, countries, etc. They are outside legal parameters per the GDP requirements per laws, debt ratios are maxed out big time. imo ~ MM

MilitiaMan:  " Dagher adds, “The government's goal is to approve a budget for what remains From the fiscal year, it is obtaining additional internal debt, because it has drained previous borrowing, and it cannot borrow from the International Monetary Fund and other international bodies,” noting that “the proposals of the Finance Committee in Parliament are more convincing than the minister's proposals in the current disputes. ”

"In the context, sources reveal that the Iraqi government is trying to send a budget proposal for the remainder of the fiscal year without taking into account the rates of deficit and public debt, indicating that it is a “legal violation” that must be avoided, and economist Ahmed Hathal says,"

MilitiaMan:  Now, since they tell us they can change the next or subsequent budgets, then they can also adjust the rates associated to them.

We know the goal is to go to a social market economy. A Market economy is free to trade across borders. A program rate doesn't get into the free markets. But, an international rate does get them into a market economy.

Where they can borrow in effect from themselves with leverage from the value of the new exchange rate / currency. Just as the IMF and World Bank have told them. We see a clear theme lately that is pointing to that Iraq is backed into a corner. They have no liquidity to pay salaries and they tell us they have two choices. Austerity or float the currency.

The former would not go well with the citizens that have suffered enough and would be effectively a poison pill for those that vote for that, whereas, voting to float the currency to get into the market economy where they can borrow from themselves effectively, because they will be able to get into the secondary markets just has the IMF and WB suggest they do.

The COM is to have a special meeting in regard to the 2020 budget then it will be off to the HOR. My view is they will not vote for Austerity. They'll vote for the latter imo. That is Float the currency or a similar manner to allow for new borrowing.. The feasibility study is about value related issues. Issues that those in the above meeting would know all to well about.

So from the looks of things the cards will be on the table soon enough to see if any of this is pertinent or not. My bet is what is in print supports they will see the reforms through now.

The solutions is to raise the value (financing by inflation) and floating the currency. imo ~ MM

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Two solutions to the problematic of the Iraqi economy

"In another context, independent politician Ibrahim Al-Sumaidaie believes that the Iraqi government has two solutions to the problem of the Iraqi economy, “either financing the economy by inflation by floating the currency, or taking austerity measures and reducing employee salaries and operating expenses,” indicating that “the best solution is financing by inflation,” and he adds. For "The Independent Arabia", "floating the currency helps stimulate domestic production, and reduces the import that drains the country's economy."

He continues, "The Iraqi economy has paid exorbitant costs in attempts to stabilize the exchange rate of the dollar through the currency sale window in the Central Bank, which has been exploited by great corruption and wasted half of the country's economic energies."

 "the 2020 budget will also include a request from the government with the approval of Parliament to allow it a new loan, and this will depend on the feasibility study of the request by the Finance Committee,"

"the government informed us that it will send the 20-20 budget at the end of this week, indicating that the budget will be simple, but it will include a request for Parliament's approval to allow new borrowing.

"Al-Jubouri added that, "Until the next budget, there are paragraphs for internal and external borrowing to pay salaries, and therefore there is nothing new about them apart from the investment framework and appointments."

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Exchange Rate Mechanism (ERM) Definition

 By ADAM HAYES  Updated Oct 21, 2019

What Is an Exchange Rate Mechanism (ERM)?

An exchange rate mechanism (ERM) is a device used to manage a country's currency exchange rate relative to other currencies. It is part of an economy's monetary policy and is put to use by central banks.

Such a mechanism can be employed if a country utilizes either a fixed exchange rate or one with floating exchange rate that is bounded around its peg (known as an adjustable peg or crawling peg).

"What is a Free Market? The free market is an economic system based on supply and demand with little or no government control. ... Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions.Apr 28, 2020"

MilitiaMan:  Think about this.. They talked about special details for the 2020 Budget and they will discuss it more after the approval of it. Note that it included bonuses.. Wow.. They have no money for liquidity? Or do the special details that are not disclosed bring us to how they have the money to pay bonuses? As in the special session is about the 2020 Budget tomorrow that may have changes in it There could be and has been talk of the mechanisms today with the FM and the USA Ambassador to Iraq..... imo Change is coming. lol ~ MM 

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GodLover:  This article & many others are pretty telling in where we are in our speculative investment imo. 
1) The 2020 budget per this article is a prelude to the 2021 budget....remember they need this done for accounting purposes, along with other previous budgets per articles imo.
2) They can & likely will imo borrow from the IMF or others imo.
3) Per past articles, the 2020 budget will not include investments as the 2021 budget will imo.
4) Lets not forget the Kurds have a temp deal for this budget & a permanent deal/agreements are in the works for the 2021 budget per articles imo. This to me is very telling imo.
5) Per articles...at least implying article 140 will be included in 2021 budget....which is on the table for discussion with Kurds along with other things imo.
6) 2020 budget to be voted on before the white papers are to be sent is my interpretation per articles imo.
7) White papers are to be sent prior to or along with 2021 budget mid Oct is what I recall an article stated (can't remember for certain) imo. 

MilitiaMan:  Godlover:

"This article & many others are pretty telling in where we are in our speculative investment imo. 

1) The 2020 budget per this article is a prelude to the 2021 budget....remember they need this done for accounting purposes, along with other previous budgets per articles imo.

2) They can & likely will imo borrow from the IMF or others imo.

3) Per past articles, the 2020 budget will not include investments as the 2021 budget will imo.

4) Lets not forget the Kurds have a temp deal for this budget & a permanent deal/agreements are in the works for the 2021 budget per articles imo. This to me is very telling imo.

5) Per articles...at least implying article 140 will be included in 2021 budget....which is on the table for discussion with Kurds along with other things imo.

6) 2020 budget to be voted on before the white papers are to be sent is my interpretation per articles imo.

7) White papers are to be sent prior to or along with 2021 budget mid Oct is what I recall an article stated (can't remember for certain) imo.  " ~ Godlover

MilitiaMan: Per item #2. It seems there data out that supports the IMF will not be loaning money or allowing more borrowing while Irag is at a program rate. Once they raise the rate, then imo they can likely borrow again, hence I suspect they will approve the borrowing law within the GOI. The COM will know that is part it the future already. The 2020 can be amended, just as they 2019 FML was. imo 

Per Item #5 it is my understanding the 2020 budget may address this as well, again the 2019 budget FMLA should be or needs to be considered and seems to for some reason, gets overlooked? imo ~ MM 

" Dagher adds, “The government's goal is to approve a budget for what remains From the fiscal year, it is obtaining additional internal debt, because it has drained previous borrowing, and it cannot borrow from the International Monetary Fund and other international bodies,” noting that “the proposals of the Finance Committee in Parliament are more convincing than the minister's proposals in the current disputes. ”

"In the context, sources reveal that the Iraqi government is trying to send a budget proposal for the remainder of the fiscal year without taking into account the rates of deficit and public debt, indicating that it is a “legal violation” that must be avoided, and economist Ahmed Hathal says,"

" "Member of the Parliamentary Finance Committee, Jamal Cougar, revealed, on Sunday, the details of the 2020 budget that the government submitted several days ago to Parliament, indicating that the budget presented will be for two months and may be approved or delayed.""