Hello again, and happy July 4th. As we celebrate the 240th anniversary of our independence from England I am also celebrating the 5th anniversary of my independence from the gurus. You see, it was their failed predictions of an RV in June of 2011 that prompted me to research the dinar for myself which is why I am here today. Hopefully Marcus and I will be able to help more dinarians to gain their independence as well.
As I’m sure you noticed, the dinar went nowhere in June. That’s because the CBI (Central Bank of Iraq for the newbies) didn’t want it to. They may have no choice before long, however. The lower oil prices and the cost of fighting ISIS (not to mention the drop in dinar sales which was their #2 export) has brought about an economic crunch in the country, which could drive the dinar’s value down even further. Look for another drop by the end of the year to around 1190:1. If they even survive until then. Take a look at this.
The International Monetary Fund has agreed to give Iraq a three-year $5.4bn bailout to help it manage the economic fallout of its war against Isis and low oil prices that have left a gaping hole in its budget.
The new rescue package, which the IMF said should be accompanied by assistance from other members of the international community, will require the government in Baghdad to implement unpopular cuts in public spending and other reforms at a time when the economy is already reeling.
“Iraq has been hit hard by the conflict with Isis and the precipitous fall in oil prices,” said Christian Josz, IMF mission chief for Iraq.
He added that the conflict with Isis had left more than 4m Iraqis internally displaced and was straining resources, while the steep fall in oil prices was “causing a large external shock to the balance of payments and budget revenue, which depend predominantly on oil export receipts”.
UN diplomats in Baghdad and officials in Washington say Iraq’s foreign backers are determined to get support to Iraq at a time when both the central government and the semi-autonomous Kurdistan administration in the north — both critical in the fight against Isis — look on the verge of economic collapse. With no money for repairs, several cities recaptured from Isis still lie in ruins.
However, Iraqi politicians privately said last week that the government may not be able to meet the terms of the IMF deal — which include fighting corruption and money laundering, as well as cutting subsidies and raising taxes.
Haidar al-Abadi, prime minister, is struggling to combat the patronage system, which has enriched Iraqi politicians since the US occupation of 2003. As well as facing rebellion from an elite struggling to keep privileges, Mr Abadi has been grappling with turmoil on the streets. Protesters led by Muqtada Sadr, a Shia cleric, last month ransacked parliament, demanding reform.
Last summer protests raged in several cities over shoddy electricity and water services. Politicians fear the unrest could return if they try to cut subsidies or increase taxes — especially if services do not improve.
Oil income used to account for 95 per cent of government revenues, but the price of Iraq’s oil has fallen from $103 per barrel at the end of 2013 to $22-23 per barrel earlier this year.
The low price, combined with continuing high public spending, has left a budget gap that the IMF forecast would reach $17bn this year, or 12 per cent of GDP.
To address the shortfall, the IMF has been working on a multi-billion-dollar programme with the government that includes participation of institutions such as the World Bank and G7 countries such as the US. In December, the IMF said it was lending $1.2bn to Baghdad,
Mr Josz said the IMF had agreed with the government on a three-year programme of economic and financial policies to bring spending in line with lower oil revenues and ensure the sustainability of debts. However, he cautioned that the measures would still need broad international support.
“The Iraqi authorities deserve the support of the international community in the implementation of these policies,” he said.
The new programme marks the third time in the past six years that Baghdad has turned to the IMF for help. A previous $3.7bn bailout expired in February 2013, and the Fund made a $1.2bn disbursement in July 2015.
And then there’s this:
The gurus won’t admit it but Iraq is on the verge of becoming a failed state. The last thing on their minds is making Western investors rich by raising the value of their currency to an unprecedented level. They’re just trying to feed their people, prevent civil war, and keep Iraq from falling into the hands of radicals. Our government doesn’t seem too inclined to do much to help, so that’s a pretty tall order for Iraq to handle on their own.
You may have noticed that Dinar Daddy’s website is down. It’s been that way for over a month now. No idea why but as soon as I hear something I’ll pass that along.
As for ICW, we’ve got a few more videos to upload on YouTube and another podcast coming. The other day Marcus and I had the opportunity to chat a bit with Nick Giammarino, from the Global Currency Reset YouTube channel. Nick discovered the dinar “investment” in late 2013, and shortly thereafter discovered our blogs where he got the answers he was looking for. He has a large following on YouTube and as a result he has a certain amount of pull in the dinar community. So be looking for that. Until next time.