IMO, It was a failed policy to delay the RV last time they had peace and I don't think they will delay again. Read my last paragraph as to why Iraq IMO will RV.
When will the CBI RV?
That question has been asked and answered over the years by both the former CBI Governor and Architect of the Monetary Reform, Dr. Shabibi, and by the proxy Maliki appointed governor Allek.
They both said, "when the conditions are right. There needs to be stability and security."
Where are we at now with security and stability?
After nothing but political conflict the entire 2016, GOI is finally making some progress. They approved five of Abadi's choice of technocrats Ministers, including Sunni South Oil Co manager as the new Oil Minister. They are reviewing the last two Minister choices. Abadi wanted a technocrat government, and after a long battle, vacation, and an unfavorable court ruling, he finally almost has it. His choice of Interior Minister is being discussed now, and the remaining two positions should go through within the next month.
The Amnesty Law was passed yesterday. This goes directly in dealing with corruption.
Next week they are working on the Judicial Law.
UN has stepped in to help with investigation and prosecution of corruption.
Progress is being made towards liberating Mosul, which is expected to be liberated this year. October should see the main battle begin.
Abadi, Zebari and the CBI worked in the Spring and early summer with the IMF, UST, and WB on their double disasters of the cost of the war against ISIS and the fall of oil prices from over $100 to $30. The plan by the IMF includes many things, including loans to help with the budget gap. The IMF was insistent the Iraq make cuts in their 2016 Budget, and is overseeing the 2017 Budget. The IMF did not want to release tMonetary Reform:
IMF:he approved loan money without knowing that there was fiscal responsibility. Cut the budget, collect taxes and tariffs, lower the expected price of oil, grow the non-oil sector of the economy is the non-negotiable terms of the IMF. The have the loans ready to go, but this time they are not just giving Iraq money without the GOI during their part. Keep in mind between the politcal chaos, the court case, and Ramadan, the GOI has only been working for a month or so.
The Finance Committee is working on the 2017 Budget draft, debating on what the price of oil should be estimated for. Abadi is saying that the 2017 Budget will be ready to submit to Parliament by next month, AND that it will include resolution of the Kurds' oil and budget percentage. The proposed draft looks to be fiscally responsible and is being reviewed by both the IMF and WB. No loans have been distributed by either. There is a push to get next year's budget completed and passed. Submitting a budget in September for vote will certainly be in record time for Iraq.
IMF's LOI: Investment Law and MCP:
In addition to the fiscally conservative Budgets, the IMF wants the CBI to cut out their multiple currency practices by year's end, have regulations that can identify who and why is buying USD/foreign currencies, and the passing and implantation of the Investment Law. IMO there will be NO RV until those requirements are met.
Why no RV "By Mid Year"?
Needed a COM (Council of Ministers)
Needed to pass Budget cuts
Needed to approve Loan agreements
Needed to curb corruption
Need to pass Laws
Need to cut out MCP
Need to pass Investment Law
Need a voted in Governor of the CBI
Why didn't they RV by Mid-Year?
That's a good question which no one knows. What we do know is that when the IMF came up with their plan for Iraq last December, they had assumed that Abadi would get his technocrat government and the laws would be passed. Instead, there's been a seven month delay with the GOI. The IMF has requirements.
Although, Zebari, Abadi and the CBI signed the agreement on the terms of the loans from the IMF last May, the GOI, after getting back in session in July, popped up and said, "Wait a minute, you can't do that without our vote because you would be getting us into debt without our approval, and that's not Constitutional." So, the GOI is now reviewing the terms of the IMF loan.
Corruption is a top priority. No RV or much of anything going to happen without curbing corruption. That's a political battle since everyone is corrupt. But, there is progress. The CBI isn't going to RV until corruption got under control. But, there has been "mega-progress" on this issue with the Amnesty Law passing yesterday, the U.S. Supervising the daily CBI auctions, the UN stepping in to take over corruption investigations, and the GOI questioning corrupt officials. Today they fired the Defense Minister - on the eve of the Mosul battle - because of corruption allegations.
Proxy Appointments: Governor of the CBI
In addition to getting all seven new Ministers voted in by the GOI, Abadi will next need to get proxy positions properly voted in. That includes the Governor of the CBI position. I'm assuming that he will first get the remaining two Ministers positions voted in before moving onto submitting his choices for the proxy positions.
IMO, the U.S. has changed their position and involvement in Iraq last December after their policies had completely failed. Getting rid of ISIS, establishing a stable government, curbing corruption are all key issues that we see are being addressed. But, another failed policy, IMO, was not RVing soon enough. By withholding that carrot, the U.S./UN/IMF failed at attracting and keeping investors.
With ISIS taking over, the reconstruction phase of the SBA or Marshall Plan never got started. This led to further vulnerability of dysfunction and terrorism since their economy never rebuilt during peace time. That failed policy of delaying an RV, IMO, is going to be corrected.
The First thing a country needs to do after war is RV. Mosul will be liberated in the next few months. The GOI just needs to pass a few more laws and approve a few more positions
The WB and the IMF are ready with loans to help Iraq through their double crises of ISIS and low oil prices. Basra is doing well economically. IMO, this time around when there is peace, Abadi will RV.
The IMF historically prefers April to RV, or Fall.