A quick update…
Are we all up to date on the investment law and the significance of this being passed?
Some time ago, the IMF told Iraq that it was concerned about Iraq’s financial stability in the long term because of its sole reliance on oil sales, and that it should diversify its market to achieve long term stability.
Oil sales could in theory be enough for them, because 90 percent of Iraq’s land mass holds un mined oil, enough to supply western civilisation for several hundred years – and gold in similar amounts.
But – the IMF told them they needed to diversify, and attract foreign investment into Iraq.
They couldn’t do this, for several reasons – lack of legal support for investors to safely invest, and huge corruption and money laundering problems – thank you Nuri Al-Maliki.
Because of all this, they didn’t let the CBI proceed with revaluation in July 2012.
In comes Abadi, who in record time has passed all the required legislation. Stolen money is being found and returned, corrupt government officials are being prosecuted, the money laundering laws were passed, and as of yesterday any foreign investors wishing to invest in Iraq (and this is a very long list) can now do so safely.
Even without the CBI stepping in to revalue the currency, conditions are now exactly what are required to create a thriving economic market which in itself will drive the value of the currency upwards.
To anyone who has been following this for a long time, the next part of this is for Iraq to complete their currency reform.
I can’t understand those who are currently saying that it will start off at a few cents per dinar and build up slowly – sorry, but can’t you read?
Iraq (or the CBI in particular) has always TOLD us what they are going to do, in plain black and white – when economic conditions allow (which as of yesterday, they now do) they will initially revalue at parity – or 1 dinar to 1 US dollar.
It has to start at parity for them to achieve compliance with Article 8 IMF, to allow their currency to be internationally traded – they will not be admitted to Article 8 with a dual currency economy, so their currency reform has to start with the dinar at least equal to the dollar – additionally Iraqis will continue to use the dollar, and what will have been the point?
And after STARTING at parity or 1 to 1, then their dinar will be driven up in value by the flood of incoming investment and trade – which is precisely why they needed their investment law passed.