Shabibi/IMF Admit & Confirm IQD rate is Artificially Manipulated
The following is proof that neither, Shabbibi or the IMF has full understanding at to the "actual" rate of the IQD - so no one here does either - end of story !
Shabibi Interview: http://www.investorsiraq.com/showthr...etary-policies.
Rahim notes that some accuse the Central Bank of adopting strict policies in order to control inflation, and others justify these policies saying that these policies are dictated by the IMF, and he asks Al-Shibibi to comment.
Al-Shibibi says this matter should not be exaggerated, noting that the Iraqi Government, not the Central Bank, has an agreement with the IMF, and the Central Bank implements the government's monetary policies.
He adds that the IMF sets terms in every agreement it signs with every country, and "while negotiating with the IMF, we try to make these terms as easy as possible. At the same time, we try to impose certain matters on the IMF," explaining that these negotiations aim at reducing 80 per cent of Iraqi debts. He adds that when Iraqi debts are reduced by this percentage, the budget costs will decrease and the speculations concerning its implementation become more certain. He says: "The 80 per cent reduction in debts, which we were able to obtain from the Paris Club, is the highest percentage ever given to a middle-income country in the entire world." Asked to explain in return for what, he says in return for policies that Iraq should implement.
Rahim also notes that the IMF asked the government to raise the price of oil derivatives and to postpone payment of the difference in salaries that was due following the recent salary increase, and he asks Al-Shibibi to explain the Central Bank's position on this. Al-Shibibi says "the IMF policies were in line with the objective to curb inflation," explaining that their outcome was for the benefit of Iraq, particularly in strengthening the purchasing power of the Iraqi dinar, which should remain under control at all times. He adds that "the Central Bank's general monetary policy is not a long-range policy; rather, it is revised every six or three months in order to monitor where things are heading."
IMF: Report:
32. The lack of data and large structural changes in the Iraqi economy preclude any
meaningful estimation of the equilibrium real exchange rate. A very crude assessment
suggests that the dinar is broadly in line with fundamentals.4 With the drop in oil prices, it
appears that a possible prior undervaluation has disappeared, and that the dinar could even be
somewhat overvalued. The relative low levels of headline and core inflation, however, do not
suggest any significant deviation from the equilibrium real effective exchange rate.
Moreover, as oil revenues are expected to rise substantially over the medium- to longer term,
the equilibrium real exchange rate is likely to rise as well. More importantly, a nominal
depreciation could undermine confidence in the dinar, destabilize expectations, lead to
increased dollarization, and reignite inflation, reversing the hard-won gains made in recent
years. The CBI therefore intends to continue to keep the exchange rate stable, but will
consult with staff if its reserves were to fall significantly below the program targets.
http://www.iauiraq.org/reports/Iraq%...ort%202010.pdf
The following is proof that neither, Shabbibi or the IMF has full understanding at to the "actual" rate of the IQD - so no one here does either - end of story !
Shabibi Interview: http://www.investorsiraq.com/showthr...etary-policies.
Rahim notes that some accuse the Central Bank of adopting strict policies in order to control inflation, and others justify these policies saying that these policies are dictated by the IMF, and he asks Al-Shibibi to comment.
Al-Shibibi says this matter should not be exaggerated, noting that the Iraqi Government, not the Central Bank, has an agreement with the IMF, and the Central Bank implements the government's monetary policies.
He adds that the IMF sets terms in every agreement it signs with every country, and "while negotiating with the IMF, we try to make these terms as easy as possible. At the same time, we try to impose certain matters on the IMF," explaining that these negotiations aim at reducing 80 per cent of Iraqi debts. He adds that when Iraqi debts are reduced by this percentage, the budget costs will decrease and the speculations concerning its implementation become more certain. He says: "The 80 per cent reduction in debts, which we were able to obtain from the Paris Club, is the highest percentage ever given to a middle-income country in the entire world." Asked to explain in return for what, he says in return for policies that Iraq should implement.
Rahim also notes that the IMF asked the government to raise the price of oil derivatives and to postpone payment of the difference in salaries that was due following the recent salary increase, and he asks Al-Shibibi to explain the Central Bank's position on this. Al-Shibibi says "the IMF policies were in line with the objective to curb inflation," explaining that their outcome was for the benefit of Iraq, particularly in strengthening the purchasing power of the Iraqi dinar, which should remain under control at all times. He adds that "the Central Bank's general monetary policy is not a long-range policy; rather, it is revised every six or three months in order to monitor where things are heading."
IMF: Report:
32. The lack of data and large structural changes in the Iraqi economy preclude any
meaningful estimation of the equilibrium real exchange rate. A very crude assessment
suggests that the dinar is broadly in line with fundamentals.4 With the drop in oil prices, it
appears that a possible prior undervaluation has disappeared, and that the dinar could even be
somewhat overvalued. The relative low levels of headline and core inflation, however, do not
suggest any significant deviation from the equilibrium real effective exchange rate.
Moreover, as oil revenues are expected to rise substantially over the medium- to longer term,
the equilibrium real exchange rate is likely to rise as well. More importantly, a nominal
depreciation could undermine confidence in the dinar, destabilize expectations, lead to
increased dollarization, and reignite inflation, reversing the hard-won gains made in recent
years. The CBI therefore intends to continue to keep the exchange rate stable, but will
consult with staff if its reserves were to fall significantly below the program targets.
http://www.iauiraq.org/reports/Iraq%...ort%202010.pdf