A Having read the Paris Club pdf, forwards and backwards….. I can shed a bit of light on this.
It is important to understand 1st, why this is important.
Iraq has been under a Grade C Credit Rating, which is why the money has not been recognized, as of yet. In order to be recognized..., that rating must be increased.
That is what I believe is happening now, and why it is critical, that Chap 7 Economic Sanctions per UNSC Resolutions, 687, 661 and 707 were lifted, as of Dec. 15, 2010.
OK, so why didn’t it RV, yet?
The Credit Rating with World Bank, IMF, BIS and the US. It is as simple as that.
Understand, that the Paris Club is a 19 member group of Official Creditors, who are also members of WB and the IMF.
Look at the Paris Club agreements like this…… It works similar to a Chapter 11 Bankruptcy.
The Paris Club Debt Total was about $42 Billion US.
Total outstanding debts (including Paris Club) was about $132 Billion.
There were 3 stages of debt reduction, from 2003 – 2005, 2006 and 2008.
During that time, additional reductions have been ongoing, for Non-Members and corporations, that amounted to about $90 Billion (est.)
Much of that has been forgiven.
The $7.8 Billion just forgiven, was most of the remaining of the 19 Official Creditors, of Paris Club, but does not include the Non Paris Club debt.
It has been 7 years, and this is a form of Jubilee, with the Official 19, meaning the 7 year Statute of Limitations, recognized in many nations, including US and many world courts.
What that means, in legal terms, is the Statute has run, as of the end of the year, 2010.
{Now….. this is some theory on my part, but based on looking at the documents, I think it is at least partly correct, in principal. The point being, this has more to do with credit rating, than anything else.}
There is a payment and debt servicing plan, that is set up, with a 1 year, grace period, that begins, July 2011, with annual installments, at adjustable interest rates, factored with the prices of oil, against the US Dollar, and final payment, in the year 2037, ending 3038.
The remaining balance, as of the year 2011, was estimated at $92 Billion, but it is already known, that negotiations, with Non Members, such as Saudi Arabia, Kuwait and others, has also been reduced, by negotiations. The actual amounts remaining, are in question, because Russia, Romania and others, are not factored into the model….. only estimates…. and much of that money is still in negotiation.
Now…. I come back to 2 main questions.
1. How does this affect the International Credit Rating of Iraq?
2. How would it affect the RV?
Answers:
1. The Credit Rating of Iraq, should be upgraded, as of this year, just as yours or mine would after 7 years, in Chap 13 or 7 Bankruptcy.
2. The affect on the RV would be in 2 parts, to this question:
Part 1: The outstanding Balances of the plan, is less than the last year’s GDP, and the projections of the GDP are expected to increase, dramatically, so the debt to ratio, for Iraq, should have a very positive effect, on the actual World Credit Rating.
Part 2: The ability of Iraq to repay the remaining negotiated balances, should be a no brainer…. because the vast oil reserves, projected Foreign Reserves and account balances, huge sums of wealth, withheld in trust accounts, projected non liquid assets, non convertible currencies, non mint precious metals, previously blocked accounts and frozen assets, etc. etc., ( These amounts are vast, in comparison to the remaining outstanding debts.)
So….. my final estimation is simple. Iraq is simply waiting for a 2011 Budget and the final reports from 2010, before the Official Creditors and World Banks, upgrade the credit rating and IMF upgrades the Article XIV status, to Article VIII compliance.
The RV is 100% dependent on the World Recognition and Credit Rating.
That is what we are waiting for.
So…. there ya have it.
Now I ask….. is it done?
Not until the Budget is final and the 2010 reports are submitted to the IMF, per the SBA and Article XIV provisions.
and maybe the GOI fully seated as Shabbi has stated
How long does that take?
I think, with this new government, it will happen really, really, fast….. by comparison to the last, do nothing Parliament …… especially, I am hopeful with the replacement of certain Ministry positions.
This is why I personally choose not to get wrapped up in all the hoopla, with rumors and so called intel. even though I seek truth.
If I were to give an ETA……. I would say….. give it a week or 2 and let’s see how the Parliament does, getting the Budget together.
It is not that the RV is in the Budget…… but that the Credit Rating depends on the passage of it and those end of year accounting audits and 2010 Statements.
Want RV????????? Think Credit Rating. The RV is 100% dependent on that rating.
Credit does not change, just because a country decides to set a new value on currency…. it does not work that way.
In order to increase the value….. it must first HAVE VALUE.
Without the Credit Rating to be recognized….. it basically has NO VALUE, as far as being convertible, by world banking standards.
That rating cannot be changed , just by revaluing. The reverse is true. The Revaluation comes from the Rating First….. then the Value will be adjusted.
I know…. that is not what many wanted to hear, but I am interested in the truth…. not hoopla….. as much as I would love to see an RV at $3.42, today……. It will happen, in divine order. I would not be invested, if I did not believe that is true. It WILL HAPPEN…. and in my estimation, very soon.