Article: “Monetary policies in Iraq and proposals for the next phase applications”
We are all, or at least most of us, frustrated that the CBI has seemed to be unable to move “around the corner” leading to a rise in the value of the dinar.
This article for once outlines in detail…the fact that the CBI definitely has a plan and that the plan includes, first, stabilizing the dinar rate, then second, raising the rate, and, third, eventually removing the large notes from circulation ( a clear goal of at least $1 for the dinar).
Therefore, if nothing else, this article is a confirmation that the overall plan remains in place in spite of the obvious drawbacks.
The article is also fairly clear on those elements that have caused the “plan” to be stalled to a large extent…in addition to those things that we have always known, there were a couple new points made that make the lack of progress more understandable. The article is also specific in that it sees that the role of the government is obstructive rather than helpful in moving toward a more open market driven economy.
It is my view that Abadi is a good guy and that he is actually looking for ways to help move this process along. Ideally, the CBI will give him suggestions that he can implement unilaterally (without approval from Parliament) to remove some of the strings that exist in government funding and expenditure, reducing the move to a market economy.
I, for one, remain cautiously optimistic that the plan is moving forward, even though at a snail’s pace… I see that pressure is increasing to make a “leap” forward. The passage of the Investment Law this week, hopefully, will be a big step in the plan because it will open the door for protected investment and land ownership from foreigners…we could begin to see a significant increase in foreign investment in the near term.
Then we need some banking relief through a new Banking Law. Third, we need to see the introduction of the large 50K notes. Reducing the Iraqi money supply…will lead to a rise in the value of the dinar. Once this process begins, hopefully before the year ends, I foresee a rapid rise in the value of the dinar…most importantly due to the influx of new money from abroad. I’m actually excited to see this plan laid out in detail for the first time.