government hopes will reduce inflation and strengthen the dinar. (electricity contracts)

government hopes will reduce inflation and strengthen the dinar.






Iraq Central Bank to issue treasury bills worth $2.4 billion to finance electricity contracts

The parliament has authorized the Central Bank to
issue treasury bills to raise $2.4 billion for the Ministry of
Electricity, a parliamentary source said.

The source refusing to be named said the money
will be specifically used to finance contracts by the ministry to boost
power supply in the country.

Power output is still below pre- 2003-U.S. invasion rates despite the funneling of billions of dollars into the national grid.

The bills will be sold on domestic markets and
investors are promised an interest rate of at least 2% and the
possibility of recouping their cash in one year.

Iraqi private banks will have the chance to take part in issuing the bills.

The money raised will be in local Iraqi currency
the dinar and the Central Bank will deposit it on behalf of the
Electricity Ministry in dollars.

The decision will effectively suck huge amounts
of money out of the system in the country – a move which the government
hopes will reduce inflation and strengthen the dinar.

At current exchange rates the sum of $2.4 billion is worth 2.8 trillion dinars.
http://www.azzaman.com/english/index...-20%5Ckurd.htm

http://www.azzaman.com/english/index.asp?fname=news\2009-06-20\kurd.htm

The wording on this article is most interesting! Thanks Thump!

I would agree, interesting wording

Very interesting that the tight monetary policy of the CBI continues.
Issuing bills "parks" 2.8 trillion dinar and as the article says,
"sucks" liquidity out of the economy to control inflation. Its also
interesting that the CBI would reduce interest rates a couple of days
prior to announcing they were going to issue the bills. Since the CBI
manages the reserve requirements (last I heard at a 75% level) then
this transaction can be accomplished very quickly. Since the last CBI
reported inflation at less than 4%, and monetary interventions take a
few months to move through the economy, then the last couple of months
of reducing liquidity and this large bill auction should about kill
inflation in this economy.. All part of a plan... all very textbook.

"The decision will effectively suck huge amounts of money out of the
system in the country – a move which the government hopes will reduce
inflation and strengthen the dinar".

good article

sounds like they are moving in the right direction

thanks