Zeeman: can someone explain to me why is iraq borrowing from the gulf coast and 3 other banks to pay salaries when all they have to do is revalue their currency and they will be st. thanks
Ross: MO it would be foolish financially to announce a RV prior to the reality…to the best of my knowledge most countries have gone to extreme measures to obfuscate the announcement…just remember what Kuwait did. So I still have hope that they will do the obvious this time…with all we have learned from Frank and the teams, with a new PM and with our Pres we should feel fairly confident something is about to pop. IMOO
JJimmyJJ: I don’t know that this is the plan, but if you are about to change your exchange rate, you might borrow money for a couple of reasons:
- Debt becomes cheap. Meaning, if I borrow $1m US and then change my exchange rate, the amount of dinars it cost to borrow that $1m US just went down at least three decimal places; so instead of 1B dinar, it only cost them ~1m dinar.
- Borrowing money can be a way to do another country a favor. For example, if Iraq owes Kuwait a favor or two, Iraq could agree to borrow 1M in Kuwaiti Dinar for 1B Iraqi Dinar. Iraq then changes their exchange rate, and Kuwait just made a lot of money as that iraqi dinar is now worth ~1B US$.
Samson: Its consultant: The government borrowed three trillion dinars to secure the salaries of this month
23rd May, 2020
Today, Saturday, the economic advisor to the Iraqi government revealed that the latter resorted to borrowing three trillion dinars to secure employee salaries for the month of May.
Mazhar Muhammad Salih told Shafaq News, “The actual expenditures of the Iraqi government are more than seven trillion dinars per month, of which five trillion and 500 billion dinars are salaries for state employees, retirees and beneficiaries of social protection.”
He added that “the financial liquidity and oil revenues and others do not pay the salaries and do not meet their insurance,” stressing that “the government borrowed 3 trillion dinars from government banks to secure the salaries of this month.”
The adviser to the Iraqi government, that “the financial benefit of the loans was five percent annually.”
On May 19, the Iraqi Prime Minister, Mustafa Al-Kazemi, directed the release of the employees’ salaries for the month of May, and confirmed that the salary will be complete without deduction.
Referred to the federal budget in Iraq depends mainly on the export of oil, but because of the fears of the Corona virus, global oil prices tumbled towards $ 32 a barrel, causing a large financial deficit in the budget amid fears of the government’s ability to secure employee salaries LINK