Do we need article 8 before rv? After searching the various forums and after chat this morning, it appears that there are people who believe that not accepting article 8 of the IMF's articles, restricts Iraq from adjusting their exchange rate. www.imf.org/external/pubs/ft/aa/aa08.htm
Now,for certain, the IMF and Iraq are working together to get Iraq on-board with article 8. However, after studying the article, I dont see where it specifically allows Iraq to revalue their currency, or not revalue if Iraq hasnt accepted yet.
Therefore, I must reiterate my belief that the CBI can now revalue anytime, when they desire, now that they have the IMF's blessing.(sba approval) Again, I believe the next 2-3 months will tell the tale.Show results
I think I know what you are trying to get at. Can you please elaborate? I know that Iraq's letter of intent to the IMF stated that they wanted the exchange rate to be allowed to reflect the structural reforms that were to be put in place, in the medium term. Until they get the proper reforms in place, they are restricted from changing the exchange rate. However, the Iraqis didnt specify what exact reforms they were waiting to complete first. Since the fall 2004 letter of intent, Iraq has been putting many economic reforms in place.
In yesterday's IMF comments on the stand-by arrangement with Iraq, the IMF stated that the CBI wants to continue on with more reforms in 2006, such as the proper facilitation of foreign exchange and money markets.
Without a doubt
Article VIII is necessary to make Iraqs currency convertible and accepted. This is the next step in the evolution of the revalue. This step can take days to months to complete since the Article will hinge on economic policies created by the new gov't.
By accepting the obligations of Article VIII, a country gives confidence to the international community that it will continue to pursue sound economic policies that will obviate the need to use restrictions on the making of payments and transfers for current international transactions, and thereby contribute to a multilateral payments system free of restrictions.
The acceptance of Article VIII obligations can be expected to facilitate its international trade and to improve the economy's attractiveness to foreign investors. It will be a major step toward full convertibility and will be an important milestone in the country's integration into the global economy.
Acceptance of Article VIII obligations, in the case of Iraq, will most likely come hand in hand with changes in Iraqi exchange laws. That could be the day after changes in the laws, or 6 months down the road. That decision lies in the hands of the Iraqis.
Re: Without a doubt
Welcome dinarman, and thanks for elaborating in such detail about the Article 8.
I agree with you and voted as such. I just hope they get off thier backsides and make it happen!!
I have a question for you...does the IMF show who has accepted Article 8 agreements on their website? I've looked for hours and have come up empty...
BTW, pop into our chat room when you get the chance. We have great discussions there.
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Hope to see you there!!
Edited by: PBx at: 12/24/05 5:50 pm
Re: Without a doubt
Can somebody please point me to what section of article 8 deals with authorizing a country's currency to become fully convertible. All I see about convertiblity, deals more with convertibility of foreign-held balances in order to make payments. This could be done after Iraq already makes the dinar convertible. Thanks.
I have some questions though.
Iraq is a founding member of the IMF, Dec 27, 1945.
Since joining in 1945 they have had an internationally exchanged currency....have they EVER agreed to article VIII? I can't find this info anywhere.
According to some, this is an absolute must (Art. VIII), so has Iraq been suspended from the IMF at one time, therefore requiring them to agree to article VIII again?......or, at some point in time have they had an internationally accepted currency WITHOUT ever agreeing to article VIII?
As I see it now, in the past, Iraq had a convertible currency WITHOUT agreeing to Art.VIII
I need some answers before I get worked up over needing Art. VIII for the RV.
Re: PBx. those that have agreed to Art. VIII
Okay. So the consensus is that we need Iraq to accept art 8, before we have the rv. As this shouldnt take more than a month or two after the government convenes in January, the next question is:
Do we need Iraq to accept any other articles before the IMF will allow them to rv?
Re: PBx. those that have agreed to Art. VIII
I found this link from another forum. It deals with when Iraq concluded art 4 consultation with the Fund, this last summer. Very interesting read spelling out the structural reforms Iraq needs to implement. It also mentions the need for Iraq to accept art 8 in order to move ahead with plans for a "liberal foreign trade and exchange regime".
"Directors welcomed the authorities' intention to establish a liberal foreign trade and exchange regime and looked forward to Iraq's acceptance of the relevant Article VIII obligations. In order to facilitate the process of acceptance, the authorities should move expeditiously to review and overhaul their legislation and regulations in order to remove any possible exchange restrictions that may fall under Fund jurisdiction."
Do we need article 8 before rv?
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