Thread: Iraq/Dinar News. 09/05 to 01/14/07

if you want to take some time to read why maybe Saudi forgave Iraqs debt please read this article regarding gcc...I know its dated 2005

GCC: Full steam ahead to monetary union | SCB Economic Update


hope this link works

according to this article, if Iraq wants in the gcc....they better get their shite together quickly...maybe this is why Saudi gave them debt relief

Central banks reaffirm the terms for setting up of single currency in 2010: Ability to meet economic criteria depends largely on oil prices; FX volatility in the region to increase over time.


The six members of the Gulf Cooperation Council (GCC; consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE)) took a step closer to monetary union last week as central bankers agreed the text associated with fiscal and monetary targets agreed in March.

Given the imperative of job creation in the region, there is an increasing realisation of the need for the region to become a more attractive investment site for both small and medium enterprises and larger companies. The key is to make it easier and cheaper to set up companies and then allow them to operate efficiently.

In this regard, much work remains to be done. In its recently released report - Doing Business in 2006: Creating Jobs - the World Bank ranked countries according to how easy it is to do business. Out of the four GCC countries that are ranked, Saudi Arabia is best positioned at 38th out of the 155 countries surveyed (Kuwait is 47th, Oman 51st and the UAE 69th).

In terms of starting a business, the GCC countries are comparable to East Asia. The number of days to set up a business averages 47, compared to East Asia's 51. Meanwhile, it still costs almost 40% of per capita Gross National Income to set up a business versus 41.7% for East Asia. However, there is considerable scope for improvement with OECD averages of 19 days and 6.5%, respectively.

Given the lack of an advantage in a business environment context versus East Asia, the issue of size becomes increasingly important. For larger companies in particular, there is a need for new investments to show their ability to become economically significant. In recent times, China and India have been dominating the headlines in terms of attracting foreign direct investment. This is partly due to their ability to produce things more cheaply than other countries, but as important is the attractiveness of the local market.

The size of the economy can be considered a proxy for the general size of opportunity facing the corporate sector. In 2004, China's GDP was USD 1,649bn. For India, it was USD 692bn. The largest GCC economy is Saudi Arabia at USD 251bn. For the GCC as a whole, it was almost USD 450bn.

An economically united and efficient GCC is clearly a more interesting proposition for larger companies than each individual economy, especially given the impediments to trade evident within the region. This is why trade relations within the GCC have been a core focus of late.

The natural extension of this trend for increased integration is to introduce a common currency in order to further facilitate trade between the different countries. On Wednesday, Bahrain central bank chief Rasheed al-Maraj reiterated that the region's central bankers had agreed to pursue monetary union in a similar fashion to the rules used in Europe. These rules still have to be formally signed off by the countries' rulers, after which it is envisaged that countries will need to comply by 2007 before monetary union is achieved in 2010.

In line with the Maastricht criteria, the requirements for entry are that a country's budget deficit is less than 3% of GDP and the public sector debt is less than 60% of GDP. In addition, each country will be required to have currency reserves in excess of four months of imports. On the monetary front, inflation must not exceed the weighted average of the six countries' inflation rates by more than 2%, while interest rates must not exceed the average of the lowest three countries by more than 2%.

Given high oil prices, it will surprise few that all six countries are expected to comply with the fiscal, debt and FX reserve criteria by the end of 2005. Indeed, as of 2004 data, only two countries failed to meet the criteria. First, Saudi Arabia failed to meet the public sector to GDP ratio criterion. However, strong oil prices in 2005 will boost government revenues, allowing the Saudi government to pay down its debt while also boosting the level of nominal GDP, pushing this ratio down. Second, Bahrain fell marginally below the FX reserve requirement threshold, but this is also likely to be resolved by high energy prices.

Of course, whether these countries can sustainably meet these criteria is a different issue. While the economies have been diversified somewhat, less progress has been made on diversifying the source of government revenues. Therefore, if oil prices were to slump dramatically, then budget deficits may once again rear their ugly heads and jeopardise compliance.

One option being pursued by the UAE is to implement a value-added tax in order to improve the country's resilience to lower oil prices. Such a policy response across the rest of the GCC would be welcome. However, even without this response all would not be lost under such a scenario. In March, a senior GCC official suggested there is scope for flexibility should low oil prices induce a temporary increase in the budget deficit.

As the situation stands currently, our analysis suggests that the break-even oil price, as far as the budget deficit is concerned, varies from as low as USD 10 per barrel (pb) in Kuwait to USD 28pb in Saudi Arabia. For Saudi Arabia to record a 3% budget deficit as a percentage of GDP, we estimate oil prices would have to fall to USD 24pb or below. While this is not inconceivable in the event that we see a sharp slowdown in global economic activity, it is not expected to happen either this year or next as oil supply conditions remain relatively tight.

On the monetary front, two countries failed to meet the criteria in 2004. Bahrain was marginally above the inflation threshold, while Qatar had by far the highest inflation rate of the region. Looking forward, inflation differentials are expected to remain wide between GCC countries and with all the currencies pegged to the USD, it is difficult to see how this can be sustainably addressed.

However, we need to recognise that all of the above analysis may be irrelevant. The EMU process in Europe showed us all that such projects are as much political as they are economic. Therefore, the possibility of the criteria being fudged, if necessary, cannot be ruled out.

Where does this leave us as far as the outlook for financial market developments is concerned? For the time being, there are more questions than answers with regards to the proposed 2010 currency union. For instance, the authorities have yet to state clearly exactly what the exchange rate arrangement will be with currencies outside of the GCC.

Some officials appear to favour a continuation of the USD peg. Other officials have indicated a floating currency may provide the GCC countries with significant benefits. We concur as such an arrangement would allow the authorities to either denominate oil sales in the new local currency or even a portfolio of foreign currencies, rather than be attached to a still structurally weak USD. This should ensure greater stability in terms of the region's spending power in international markets.

Therefore, our favoured route is for the new GCC currency to be floating, possibly with reference to a trade-weighted basket of currencies. However, for a region used to a USD peg, and thus stability, this may prove to be a step too far, at least initially.

What is clear is that the historical confidence in currency pegs versus the USD is likely to diminish until further clarity is provided. This could have significant implications for hedging behaviour in the region. In the UAE, for example, most companies hedge their dirham interest rate exposure using the US dollar swap curve as it is a slightly cheaper way to hedge. However, as the possibility of greater exchange rate volatility looms, this becomes more risky as companies become more exposed to the currency mismatch of such behaviour.

Also, with inflation in the region generally higher than that in the US, it would make sense for the divergence in US and regional interest rates to widen over time. Of course, it is tempting to continue to hedge in USDs as 2010 is still a long way off. However, this has to be balanced by the fact that the markets will likely move well before that date depending on market expectations of what form the new exchange rate mechanism will take. Therefore, over time, we expect local currency hedging instruments to become increasingly important and liquid.


GCC: Full steam ahead to monetary union | SCB Economic Update

This article has some interesting points and may give some insights into the delays for the great and grand news we have so patiently been waiting on.

USNews.com: Looking for Light in Iraq

Originally Posted by PAn8tv

This article has some interesting points and may give some insights into the delays for the great and grand news we have so patiently been waiting on.

USNews.com: Looking for Light in Iraq

Hey Pan good article....I especially like the following:

"The timetable has already slipped by a month, but they have made progress on two key items: The parliament passed a foreign investment law last month and is debating legislation on how the oil industry will be run and profits divided among the Shiite, Sunni, and Kurdish populations. Sumaidaie expects the measure to pass this month." This verifies that there has been delays in the past and this all should have been done last month....so I would say this weekend really coincides with the delay....Come on reval this weekend. Thanks for digging this up Pan great article.

I have been thinking about the 10K distribution that we are expecting to see happen on Sunday and I was searching one of the banking sites and found some services they offer that may explain how these grants will be distributed...just speculation but very possible.

Translated version of http://www.uruklink.net/

1-Accepting all kinds of deposits:
___________________________
a. Current Accounts:
The Bank is ready to receive institutions, companies ,
bureaus and individuals willing to open ID and USD current
accounts at its branches allover Iraq, providing service in
adequate and easy terms and facilitating implementation
of operating procedures of those accounts through
exchanging checks to be cashed between those parties and
The Bank.Besides,the Bank practices clearing services and
certifying checks.

6. Issuing Credit Check;
Depending on requests of natural and legal persons, who mostly do not have current accounts at the Bank, The Bank issues ckecks drawn on paying amounts due to certain parties; such as state and mixed-sector institutions and companies or drawn for private sector beneficiaries. The beneficiaries, who ever they are, may register the credit ckeck amounts in their accounts at the same drawer bank or at other banks.
7. Pension Services,
which are represented by cashing pensions according to no-commission organized flow.

Stephanie the bank employee at IIF. Posted this shaky BOA rumor FOR 11/13/2006 what 2 weeks ago? Then all of a sudden SGS posted the 11/12/2006 gift hand out! How could a bank teller know about the 11/12/distribution 2 weeks ago! This is it people ENJOY!!!!!!!!!!!!!!!!!!!!!!!!!!! IMHO.................................

Steph + Gift ='s RV 2 + 2 ='s RV!!!!!!!!!!!!!!!!!!!!!

As we all know a ton more factors have gotten us to this point! But these 2 coincidences are just beyond comprehension!!!!!!!!!!!!!!!

Oh ya + all of the other banking insider trading speculations. From the other confirmations of our own BANK ROL members!!!!!!!!!!!!!!!

GREAT JOB PEOPLE ON THE DIGGING!!!!!!!!!!!!!

Minister of the Interior of the Kurdistan : no conditions for the establishment of Iraqis in areas
(Voice of Iraq) - 11-11-2006
This issue was sent to a friend

Minister of the Interior of the Kurdistan : no conditions for the establishment of Iraqis in the Kurdish areas | immigrant leader of Al Qaeda in Iraq passed Baghdadi * American intelligence officials and East اوسطيون discussing proposals Baker

London : contagious Fayyad Baghdad and Washington : Middle East «»
Karim Sanjari denied the interior minister in the government of the Kurdistan region of the Middle East «», the government imposed any restrictions on the establishment of non-Iraqi Kurds in the provinces of the region, He emphasized that «territory is part of Iraq, such as the remaining parts, the Iraqi citizen the right to reside wherever they want ».
And on the health of whether Iraq needs to be enough to stay in Kurdistan, said Minister of the Interior of the province, «There is no law or instructions to this effect, but the family or any citizen comes from outside the region and wants to stay and even easier for the same security checking procedures resort of his own to bring enough of the region so abbreviated procedures».

Meanwhile, informed sources said a senior official at the CIA, he met secretly with the eastern Mediterranean counterparts to discuss the proposals put forward by the Commission Baker on Iraq, in dealing with Iran and Syria. according to the sources in the Middle East.

For his part, General Peter Pace, President of the Joint Chiefs of Staff of the American army yesterday. American military leaders are preparing to recommend changes to the strategy in Iraq is the resignation of Defense Secretary Donald Rumsfeld will not have a direct impact. While the Iraqi Ministry of Health, yesterday. the killing of between 100 to 150 thousand people since the war in March 2003 (March). «The leader of Al Qaeda in Mesopotamia» Abu Hamza Muhajir, in the tape broadcast on a website yesterday that it has put 12 thousand al-Qaeda fighters at the disposal of the Islamic State of Iraq «» announced in statements to fundamentalist organizations in Iraq. He threatened to blow up the White House under the plan. He said Muhajir Mbaya Prince this state, which declared unilaterally on October 15 (October) last «say to the Grand favorite hero and guerrilla Abu Omar al-Baghdady Bayattak on blind obedience».

Modernizing its performance despite the repercussions of the security situation
11/11/2006

The non- activation of the Iraqi new investment law in terms of forming its management, supervising body, naming its members and starting their work, caused a great disappointment among investors in the Iraqi Stock Exchange, especially that vigorous efforts being made to update its performance: installing new equipment and supplies of electronic trading and organizing Stock Exchange halls, in preparation for the start of adopting this mechanism, which is exercised for the first time in Iraq.

Head of Iraqi Stock Exchange Trustees, Talib Attabataba'i, hopes that some factors which he considers crucial for the continuation of investors in this vital sector will help to employ their investments for the best. On top of these factors: the stability of the security situation.

He explained that "the investor in the Iraqi bourse faces the challenges and difficulties, arising from the deterioration of the security situation, with high spirit reflecting his view that the current situation is exceptional, and therefore it is necessary to keep on maintaining the performance of the bourse. This is evident from the general indicators, which confirms that the development in performance remains a salient feature in the march of the market".

Attabataba'i took last September as an example, and said that the number of shares traded during that month was 4.212 billion shares; that is, 527 million shares a session. In comparison to the number of shares traded last August which hit 720, the number of shares traded this month increased by 54.9% from the number in August. As for the volume of transaction in September, it hit 8.422 billion dinars; that is, 1.052 billion dinars a session, and compared to the volume of trading in August of 4.622 billion dinars, the volume of transactions for this month increased by 82.2%. As for the number of contracts executed in September, they increased by 2928 contracts from the previous month at a rate of 29.4%. He added that last month indicators show stability in prices and volume of transactions, despite the continuing impact of the security situation on the overall economic activity.

Attabataba'i said that the banking sector is almost the main engine of the market. This sector achieved, during the same period adopted in comparison above, the largest relative importance in terms of the number of shares traded and the volume of transactions which was 74 per cent and 78.8% respectively of the total after circulating more than 3.117 billion stocks at a circulation volume of more than 6.551 billion dinars.

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