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

Ahli United Bank enters into landmark agreement with the International Finance Corporation

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Bahrain, 20 November 2006 (AME Info FZ LLC)
Ahli United Bank B.S.C. today announced the signing of a landmark US$ 200 million loan agreement with the International Finance Corporation (IFC), the private sector arm of the World Bank Group.

This is IFC's largest investment in the region to date. IFC's loan, will help Ahli United Bank in its successfully pursued strategy of becoming a significant financial group, with a broader network of banks and financial institutions in the region's developing countries, including Egypt, Iran, Iraq, Lebanon, Oman, and Yemen

The announcement was made at a press conference held today at the Bank's Seef Headquarters in the Kingdom of Bahrain, following an official signing ceremony. The agreement was signed by Hamad Al Marzouq, Deputy Chairman and Adel El-Labban, Group CEO and Managing Director, on behalf of AUB, and Michael G. Essex, IFC's Director for the Middle East and North Africa, and Jyrki Koskelo, IFC's Director of Global Financial Markets.

Under the terms of the agreements, the IFC will provide a US$ 200 million tier II eligible subordinated term loan to AUB, and will also acquire a ten per cent equity (up to US$ 40 million) in Delta International Bank (DIB), Egypt, primarily through a planned capital increase. In August this year a consortium of GCC institutional investors led by AUB acquired a 89.3% stake in Delta International Bank, marking the Bank's entry into North Africa.

Speaking at the press conference on behalf of AUB, Hamad Al Marzouq, Deputy Chairman, said, 'It is a privilege to have a reputed organisation like the IFC as our partner as AUB enters into a period of significant growth and expansion. Our agreement with the IFC will support our expansion initiatives in the Middle East region and North Africa. We intend to establish our presence in new markets through our strategy of acquiring and re-structuring financial institutions.'

Michael Essex, IFC's Director for Middle East and North Africa, said, 'IFC is pleased to enter into a long term partnership with Ahli United Bank as they expand their presence across the MENA region and create a network of banks that will provide a much needed channel for private sector investment from resource-rich Gulf Cooperation Council markets to lower-income countries.'

Jyrki Koskelo, IFC's Director of Global Financial Markets, said, 'The regional expansion of AUB will support trade, financial flows, remittances, tourism, and investments from the resource-surplus Gulf Cooperation Council countries into parts of the region that need economic growth through productive private sector investment.'

Adel El-Labban, Group CEO & Managing Director, AUB, concluded by speaking on the significance of the agreement, 'The IFC has made its single, largest investment into the Middle East region through AUB, which underlines the bank's leading position in the Gulf's banking industry and its recognition internationally. '

'Through a strategy of structured, organic growth and acquisitions we have evolved into an integrated, regional banking group with a well diversified cross border reach augmented by distinct local knowledge in all the countries in which we operate,' said El-Labban.

Originally Posted by kozmar

I am really with you on the this side of Christmas holiday.

What happen? I thought I read you were going to the hospital? Are you done already?

Kozmar

Make for a great xmas for all involved!

Hospital on Thursday morning, have given Mrs A a run through on how to post etc on here! Hope to be back on personally early next week.

Originally Posted by webinvestor

I'm not trying to argue. I'm not being negative. I'm ready for a bashing.

To me "raising the rate" is well, raising the rate. It could be raising a few points or it could be raising it 1450 points... and raising it 1450 points would be a reval, not just a "raise" up. JMHO.

Again, i'm not being negative here. I'm just giving my opinion on what they might have meant when they said that.

Also, in the article posted above they mention an "improved exchange rate". Pretty vague.

Having said all this i think it's some of the other statements made that are more important in the overall picture. The CBI wants to reduce inflation, prevent "dollarization" and "improve the purchasing power". Now, a small improvment in the exchange rate will not do those 3 things. A RV will.

Ok, let me explain a little better. The CBI wants to reduce inflation, prevent dollarization, etc., etc. through an improved exchange rate. If they are too conservative they will not meet their objective. They have been conservative and one of the goals in the past couple years was to have a stable currency. I would say its been stable - under-valued but stable.

Words are one thing - actions are another. Hopefully the CBI starts to take more aggressive action to match their stated goals.

I agree whole heartedly! Talk is cheap. It's time for some follow-through. That's the way you get the ball to go over the fence, with the follow-through. You don't finesse the ball over the fence, you "swing through the ball and the ball will follow the path of your eyes, so look to the fence"...that's what our baseball coach taught us and I believe the principle carries over to so many areas of our lives. Funny thing too...when I connected with the ball, more times than not, it went over the fence...oh to be a young man again. Sorry, got caught up in remeniscing for a moment.

Iraq's debts vanish

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20 November 2006 (Iraq Directory)
International Monetary Fund previously approved on 23 / 12 / 2005 the "Support Arrangements" to cover the stage until 2006. Such arrangements will speed up the extinguishing of approximately (130) billion dollars of the total debt accumulated upon Iraq during the era of the former regime.

Members of Paris Club

On the 21 / 11 / 2004 Iraq negotiated a preliminary agreement with the Eighteen countries that make up (the Paris Club) for an immediate write-off rates at 30% of Iraq's debts which amount to about 50 billion dollars credited to the Member States (the United States of America wrote off all its debt upon Iraq which is nearly four billion dollars in January 2004).

As for writing off the second installment of Iraq's debts to Paris Club countries, which are equivalent to 30% of the original debt, Iraq has signed the Convention of the (Support Arrangements) with the International Monetary Fund in the 23 / 11 / 2005 to implement it.

Entering these arrangements with the IMF, the debt will be reduced by additional (12) billion dollars to the Paris Club, followed by the elimination of the remaining debt of (8) billion dollars automatically, in case Iraq succeeds in implementing the (Support Arrangements) convention with the IMF in 2008.

The Gulf Cooperation Council

A number of the (Gulf Cooperation Council) States called upon Iraq to payback amounts that exceed (50) billion dollars offered by those States as financial assistance to the former regime during the Iraqi-Iranian war from 1980 to 1988. Iraq has received assurances from those States to settle the debts under conditions similar to those, at the very least, agreed by Iraq with the Paris Club countries.

In spite of the tireless efforts made by the Minister of Finance, Professor Baqir Jabr Azzubaidi, to exempt Iraq from all its debt to Saudi Arabia, on bases Arab brotherhood and common destiny, the results were not satisfying... We hope that the Saudi side understands of the current circumstances in Iraq and that the government of national unity is not responsible for this debt in the first place. However, (40) billion dollars, or more, will be written off in case of signing bilateral agreements with the States of the Gulf Cooperation Council during the coming year 2007.

States, outside the framework of (the Paris Club)

Iraq is in debt of (20) billion dollars for countries outside the scope of (the Paris Club). In this regard, Iraq had signed an agreement with (Hungary, Romania, South Africa, Czech Republic, Slovakia, Malta), which agreed to cancel all debts by100%, according to personal efforts by Mr. Baker Jabr Al-Zubaydi, Minister of Finance, and talks are still continuing with other countries with great success. An agreement will soon be signed with (Bulgaria), from which Professor Aziz Jaafar Hassan, Personal Adviser to the Minister of Finance, had returned a few days ago to prepare the conditions for the signing of the bilateral agreement for the settlement of Iraq's debts with Bulgaria.

Commercial debts

More than (600) business entity claims for the payment of debts owed to Iraq during the period of the previous regime totaling more than 22 billion dollars. Iraq has paid these debts on basis similar to the Paris Club agreement and has completed more than (4) commercial offers cash rate (25 / 10) cents for every dollar, reducing the total debt by more than (4) billion dollars; in addition to offering the senior creditors, whose debts are more than (35) million dollars, the purchase of bonds at a total amount of (14) billion dollars. These bonds were issued roughly equivalent to (3, 225) billion dollars and is expected to reduce Iraq's debt, which amounts to (130) billion $,to about (50) billion dollars which will be reduced to less than (30) billion dollars in case Iraq succeeds in implementing the (Support Arrangements) signed with the International Monetary Fund by 2008.

The Minister of Finance, Baqer Jabr Al-Zubaydi, said that the Iraqi government has inherited major challenges, (3) years ago, including the debt burdens which amount to 130 billion dollars; however, many of those challenges will be passed. The Minister of Finance and his team were able to reschedule Iraq's debts, which most of them will be resolved by 2007.

Originally Posted by Caroline

Thanks for commenting on this, Adster. I thought you would, lol.

There's just so much information right now...it's hard to keep it all straight, much less fully understand it.

Caroline

That's what Maliki thinks!

Originally Posted by Adster

Let's look at the above carefully. What does this mean? Well it means in order for Iraq to be entered back into the world economy it HAS TO have a fully convertible worldwide currency. That's the first point and very obvious! We've heard all along that Iraq want foreign investment etc.

The second point is that in order for Iraq to be back into the international fold they will need to import foreign goods. Can they do that currently? Well, let's think of it this way. Mr Saddam wants to import a new pc from say Florida, that computer costs $1000. So this pc will cost Mr Saddam $1000 x 1455 (average current dinar rate for example purposes). So it will cost him in total 1,455,000 dinars. Crazy amout eh?! Now at an exchange rate of 1 to 1 it will cost him 1000 dinars.

In other words the current rate gives the people, country, no buying power whatsoever. I've read recently about Iraq wanting to import phones, start up internet cafes, electrical goods etc. Which brings me to the conclusion they have to have a rate on a par with the dollar/their neighbours and if not higher. We also know the recent articles have suggested not only raising the dinar value but also increasing purchasing power. Quite simply, this is the only way to go via a reval.

Bottom line is the current rate is artificial and will at some point soon HAVE TO go back to its real rate.

I agree with your points noted above but I do have some concerns. Better grab a cup of coffee this is going to be a long one.

1. I have been with the dinar gang since early spring of '06 and during this time especially during the summer months and the fall til the present, the concensus has always been "r/v is imminent" and the various slogans "Sept to remember", "Oct surprise" "Remember remember reval in November" etc. These (up to now) have proved to be inaccurate.

2. The cbi seems to be rock solid and the govt is not. To say the area around Bagdad is in shambles is being kind.

3. To say the current govt in Baghdad is inept is being kind. The radicals are in a fierce fight for control and if things don't change dramatically, they might win.

4. Maliki has either got to have an epiphany (life changing religious experience) or has to go. IMO His leadership is far too weak to get the job done.

5. The US elections have changed the balance of power in the US, and now the dems are screaming for us to get out asap! Maliki's time is almost up (probably by the end of the year) IMO. They need a "strong man" who will go after the militias and parliment to get the job done (see previously posted article).

Now to put this together. It appears to me that if I can figure this out and the cbi folks are a lot smarter than me, then they have figured this out as well. So how can they proceed to satisfy the international community and honor their various agreements as well as be well aware of the events going on around them? I am afraid what they are going to do is move the exchange rate to the 1365 dinars = 1.00 by the end of the year as previously stated and agreed upon. Wait for the removal of Maliki and the setting up of a new govt. Then after some stability and control returns to Iraq, then re-address the raising of the dinar to it's rightful value. Unfortunately it appears to me that this is what they think is their logical course of action.

WmKnowles has already stated that bankers aren't concerned about what anybody thinks or might be suffering. So if you can remove your compassion and morals from your thinking process, ignore the crying in the streets, children without parents, food etc., massive poverty, inflation etc., then you might think in those terms. I certainly hope this doesn't happen. And as I stated above, these are some of my fears as what might happen, not what is going to happen necissarily.

My question to all of this is what WmKnowles has stated conerning the auctions, that being pulling out over 1 trillion dinars so far and apparantly continuing on for a while more. To move the exchange rate from 1470 to the stated 1365 by years end, do they need to pull out this much dinar from circulation? Do you think this will moderate inflation or is it going to take a full fledged r/v? Or does this indicate a much large change ie r/v is the more likely course?

As stated above, I agree with Adster's thinking, but facts on the ground seem to disagree with a sudden immediate, immenient r/v by the end of the year IMO.

Finally add to this mix the enormous amounts of spending for next year, the 60% pay raise for parlament, the purchasing of all the aircraft, investment in infastructure etc, they are sending out so many mixed signals what is one to believe? One thing is apparant, the Iraqis and their timelines aren't very trustworthy (remember 10k dinar hand out which still hasn't happened although promised repeatedly) and their comments and commitments to their people don't seem to be either. Imagine if you or I didn't show up to work for no good reason other than to stall impending legislation that would help your fellow citizens, and then vote yourself a 60% payraise!!!

My intention by writing this is not to discourage anyone but rather to bring up another point of view that might help moderate if we don't r/v by years end. Maybe WmKnowles or other currency experts can refute these comments and show why cbi actions indicate a full blown r/v instead of just a exchange rate adjustment. I for one would love to read why my comments are off track and the r/v is going to happen by year's end.

worf

Iraqi PM says enhancing relations with Syria takes true willpower from both Today 20 Nov 2006

POL-IRAQ-MALIKI-SYRIA
Iraqi PM says enhancing relations with Syria takes true willpower from both

sides BAGHDAD, Nov 20 (KUNA) -- Iraqi Prime Minister Nouri Al-Maliki said Monday during a meeting with Syrian Foreign Minister Waleed Al-Moallem that enhancing bilateral relations would need true willpower from both sides.

An Iraqi governmental statement said Al-Maliki told Al-Moallem that it's in Syria's best interest to have a stable and secure Iraq, especially when other countries have already contributed in that.

Al-Maliki also said that they refuse any neighboring country to allow passage for terrorist organizations that harm Iraq, the statement added.

The Iraqi Prime Minister asserted on enhancing relations with Syria on all levels which needs true commitment between the two countries.

For his part, Al-Moallem said Syria is supports a national unity government and does condemn terrorism which targets the Iraqi people and its institutions.

The Syrian Foreign Minister said they want to be partners in all levels and increase coordination in political, security, and economic cooperation


http://www.kuna.net.kw/Home/Story.a...=en&DSNO=924324

The largest raise of employees salaries from January
20 November 2006 (Al-Sabaah)

Ministry of Finance would begin from next January counting increase of state's employees reaches to 60% and considered as higher increase by ten degrees, top level source at office of Minister Baqer Alzubaidi said.

He added that the Ministry submitted increase's suggestion to Council of Ministers to approval or submits it to Parliament, mentioned that appropriations which the Ministry needs would included in Budget of 2007. Ministry thinks that a salary of lower degrees needs to support so it decided including degrees from fifth to tenth in the increase.

The largest raise of employees salaries from January | Iraq Updates

Landmark Financial Agreement The Ahli United Bank, which holds 49% of the Commercial Bank of Iraq, entered into a US$ 200 million dollar loan agreement with the International Finance Corporation, the private sector of the World Bank Group.

This is the largest commitment made to date by the IFC in the Middle East and surrounding areas.

They plan to create a much needed channel for private sector investments to come into the gulf rich areas and developing economies.

Ahli United Bank enters into landmark agreement with the International Finance Corporation | Iraq Updates

Originally Posted by worf

I agree with your points noted above but I do have some concerns. Better grab a cup of coffee this is going to be a long one.

1. I have been with the dinar gang since early spring of '06 and during this time especially during the summer months and the fall til the present, the concensus has always been "r/v is imminent" and the various slogans "Sept to remember", "Oct surprise" "Remember remember reval in November" etc. These (up to now) have proved to be inaccurate.

2. The cbi seems to be rock solid and the govt is not. To say the area around Bagdad is in shambles is being kind.

3. To say the current govt in Baghdad is inept is being kind. The radicals are in a fierce fight for control and if things don't change dramatically, they might win.

4. Maliki has either got to have an epiphany (life changing religious experience) or has to go. IMO His leadership is far too weak to get the job done.

5. The US elections have changed the balance of power in the US, and now the dems are screaming for us to get out asap! Maliki's time is almost up (probably by the end of the year) IMO. They need a "strong man" who will go after the militias and parliment to get the job done (see previously posted article).

Now to put this together. It appears to me that if I can figure this out and the cbi folks are a lot smarter than me, then they have figured this out as well. So how can they proceed to satisfy the international community and honor their various agreements as well as be well aware of the events going on around them? I am afraid what they are going to do is move the exchange rate to the 1365 dinars = 1.00 by the end of the year as previously stated and agreed upon. Wait for the removal of Maliki and the setting up of a new govt. Then after some stability and control returns to Iraq, then re-address the raising of the dinar to it's rightful value. Unfortunately it appears to me that this is what they think is their logical course of action.

WmKnowles has already stated that bankers aren't concerned about what anybody thinks or might be suffering. So if you can remove your compassion and morals from your thinking process, ignore the crying in the streets, children without parents, food etc., massive poverty, inflation etc., then you might think in those terms. I certainly hope this doesn't happen. And as I stated above, these are some of my fears as what might happen, not what is going to happen necissarily.

My question to all of this is what WmKnowles has stated conerning the auctions, that being pulling out over 1 trillion dinars so far and apparantly continuing on for a while more. To move the exchange rate from 1470 to the stated 1365 by years end, do they need to pull out this much dinar from circulation? Do you think this will moderate inflation or is it going to take a full fledged r/v? Or does this indicate a much large change ie r/v is the more likely course?

As stated above, I agree with Adster's thinking, but facts on the ground seem to disagree with a sudden immediate, immenient r/v by the end of the year IMO.

Finally add to this mix the enormous amounts of spending for next year, the 60% pay raise for parlament, the purchasing of all the aircraft, investment in infastructure etc, they are sending out so many mixed signals what is one to believe? One thing is apparant, the Iraqis and their timelines aren't very trustworthy (remember 10k dinar hand out which still hasn't happened although promised repeatedly) and their comments and commitments to their people don't seem to be either. Imagine if you or I didn't show up to work for no good reason other than to stall impending legislation that would help your fellow citizens, and then vote yourself a 60% payraise!!!

My intention by writing this is not to discourage anyone but rather to bring up another point of view that might help moderate if we don't r/v by years end. Maybe WmKnowles or other currency experts can refute these comments and show why cbi actions indicate a full blown r/v instead of just a exchange rate adjustment. I for one would love to read why my comments are off track and the r/v is going to happen by year's end.

worf

Excellent post in my opinion. I feel we (myself included) tend to start looking at all the information with rose-tinted glasses.

I think this post is a great example of taking a step back from the norm and taking an opportunity to look at the situation with a fresh view. We all want this to happen very much but, after taking a step back myself I'm starting to think now that we may not see our desired outcome until after the new year.

JMHO