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guardian
05-16-2010, 12:45 PM
MAY 16, 2010, 11:14 A.M. ET

MANAMA (Zawya Dow Jones)--Iraq's central bank is pushing the government to sell bonds to fund an estimated $19.5 billion budget deficit and help wean the fragile country off of external support as it rebuilds, its governor said Sunday.

"The government has planned this [a bond sale] as part of the financing of the budget," Sinan Al Shabibi said in an interview in Bahrain.

"We are pushing for both to deepen the market. Any kind of financing is welcome," Al Shabibi said, adding that plans for a bond sale "aren't progressing yet" but that he expected them to do so "quite soon."

"We are suggesting, and expect, the government to use all options available," Al Shabibi said. The central bank monitors all issuances to make sure it doesn't affect monetary policy, he said.

[B]Al Shabibi also said a planned re-basing of the Iraqi dinar, by knocking three zeroes from it, could be expected next year, with the move requiring "a lot of field work."

Iraq--still battling sectarian conflict after years of war--is banking on a boost in oil production to stimulate the economy.

The government plans to boost its production of crude oil to 4.5 million barrels a day in 2014 from the current 2.4 million barrels a day. Iraq sits on the world's third-largest oil reserves.

Al Shabibi said he hopes that international banks will also be involved in financing the government's reconstruction effort.

While the central bank is talking to many international banks interested in setting up in Iraq, the country's security situation is still a sticking point, he said.

"We are talking a lot to them, they are welcome," he said. "They are very sensitive to security questions. I think security problems are exaggerated, and we try to explain that."

He said a planned pullout of U.S. troops from the country "will be a sign of security."

"We don't want to depend on the state for financing," Al Shabibi said, adding that economic growth hinges on oil "on the quantity side" as well as how oil prices hold up.

A budget deficit this year, estimated at 22.9 trillion Iraqi dinars ($19.5 billion), has had Iraq turn to the International Monetary Fund and World Bank for loans.

The budget shortfall will be financed mainly by oil income and a loan from the IMF, though the central bank is "encouraging financial diversification."

"The government is still in negotiations with the World Bank" for a $500 million soft loan, Al Shabibi said, after the IMF approved a $3.6 billion loan in February.

Iraq began to accumulate debt from mostly European creditors in the 1980s, building up the government's debt to almost $140 billion. "We were indebted to almost every country," Al Shabibi said.

Next year, the country will begin paying back $7.8 billion owed to the Paris Club group of creditor nations, who in 2004 waived 80% of about $40 billion lent to Iraq.

"The repayment will start next year until 2028," Al Shabibi said.

Debts owed to Arab states, including Saudi Arabia and Kuwait, haven't been settled. Asked for a timeline for that, Al Shabibi said: "This is a question of negotiations." He said a condition of the Paris Club debt deal was to "seek comparable treatment from other creditors."

Meanwhile, the $3.6 billion IMF loan has "not yet materialized," he said. "The loan is ready but I think there is still a lot of discussions on budget."

The IMF said at the time that about $455 million of the loan--meant to help Iraq meet balance of payment requirements--could be disbursed immediately, with the rest to be given in the coming two years.

http://online.wsj.com/article/BT-CO-20100516-702474.html?mod=WSJ_latestheadlines (http://online.wsj.com/article/BT-CO-20100516-702474.html?mod=WSJ_latestheadlines)

dinardawg
05-16-2010, 01:02 PM
thank you for posting

Al Shabibi also said a planned re-basing of the Iraqi dinar, by knocking three zeroes from it, could be expected next year, with the move requiring "a lot of field work."

dd

Med
05-16-2010, 01:16 PM
ok this is total bs.....in february the Advisor to the Central Bank said they already started the process in early February.....then they said they didn't know where anybody got the idea about the dropping of three zero's.....also both Maliki and Allawi called for a revalue and Allawi stated that one his first issues was to bring purchasing power to the people and bring back the IQD to a higher rate of exchange.....this is smoke and I usually don't believe in this kind of stuff....but why would you be stupid enough to tell everyone you have one more year to buy up and put iraq farther into debt.......when it does rv.....he is lying...plain and simple.....

guardian
05-16-2010, 01:26 PM
ok this is total bs.....in february the Advisor to the Central Bank said they already started the process in early February.....then they said they didn't know where anybody got the idea about the dropping of three zero's.....also both Maliki and Allawi called for a revalue and Allawi stated that one his first issues was to bring purchasing power to the people and bring back the IQD to a higher rate of exchange.....this is smoke and I usually don't believe in this kind of stuff....but why would you be stupid enough to tell everyone you have one more year to buy up and put iraq farther into debt.......when it does rv.....he is lying...plain and simple.....


You know Med, that's their downfall, too many of them lie...truth is, iraq's inflation rate is a beautiful 3.4%.

pepper
05-16-2010, 03:01 PM
Al Shabibi also said a planned re-basing of the Iraqi dinar, by knocking three zeroes from it, could be expected next year, with the move requiring "a lot of field work."
Looks like this might be a tiny white lie. HeHe. Thanks Guardian.