KTFA

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JJONESMX: The exchange restrictions are…
(i) the limitation that corporates can purchase foreign exchange in the auction for import transactions only;

(ii) limitation on the availability of foreign exchange cash for individuals (i.e., one request per month);

(iii) maximum limits on the availability of foreign exchange cash in the auction for banks;2

(iv) maximum limits on the availability of foreign exchange cash in the auction for money transfer companies and money exchange bureaus;3

(v) the requirement to pay all obligations and debts to the government before proceeds of investments of investors, and salaries and other compensation of non-Iraqi employees may be transferred out of Iraq;

(vi) the requirement to submit a tax certificate and a letter of non-objection stating that the companies do not owe any taxes to the government before non-Iraqi companies may transfer proceeds of current international transactions out of the country;

(vii) the requirement that before non-Iraqis may transfer proceeds in excess of ID 15 million out of Iraq, the banks are required to give due consideration of legal obligations of these persons with respect to official entities, which must be settled before allowing any transfer; and

(viii) an Iraqi balance owed to Jordan under an inoperative bilateral payments agreement. In addition, one exchange restriction maintained for security reasons should be notified to the IMF under the framework of Decision 144-(52/51). The MCP arises from the absence of a mechanism to ensure that the official exchange rate and the market exchange rate do not deviate by more than 2 percent.

1 This measure gives rise to an exchange restriction because the limitation of one request per month constitutes a governmental limitation on the availability of foreign exchange for payments and transfers by individuals for current international transactions, e.g., basic allocations for tourist or business travel abroad, family living expenses, etc. Furthermore, because of the limitation on the availability of foreign exchange in the non-cash auction to corporates and only for trade transactions, individuals who need to make payments and transfers for current international transactions beyond the maximum limit have no alternative means or channels to get access to foreign exchange, except for resorting to informal sources.

2 This measure gives rise to an exchange restriction because the maximum cap constitutes a governmental limitation on the availability of foreign exchange for certain payments and transfers, e.g., repatriation of certain investment income by nonresidents, including remittances of profits, dividends or interest. Because of the limitation on the availability of foreign exchange in the non-cash auction by corporates to only trade transactions, they would have no other means or channels to get access to such foreign exchange beyond the maximum limits, except for resorting to informal sources.

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31. The stable exchange rate has provided a valuable anchor in an uncertain

environment. This policy remains appropriate for the foreseeable future. In the medium term,

the authorities should create the conditions that would facilitate moving to a more flexible
exchange rate.

http://www.imf.org/external/pubs/ft/scr … r15235.pdf

http://www.imf.org/external/pubs/ft/scr … r15235.pdf

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