History of what the SBA means to Iraq
I was in chat this morning when some people were talking about their concerns on the SBA being extended...I havent read the article yet but here are some points to consider....I dont think the SBA being extended is a bad thing, its just necessary since Iraq hasnt completed or implemented all that is necessary....the SBA is basically a guaranteed program for Iraq to have the loans as a safety net in the event they are needed, but it ties Iraq to the IMF in helping with the debt restructuring plan. Here is a line from a gov document:
"Prior to any actual Paris Club debt relief, an IMF program must be put in place for
Iraq. The IMF published a macroeconomic assessment for Iraq in October 2003, and is conducting debt analysis for any future IMF lending for Iraq"
I was actually surprised when the deadline came and went with no rv....didnt really know how to process that because imo the rv needs to happen prior to the SBA expiring....it can be used to "shore up" the rv in the event of temporary hyperinflation , etc upon the RV happening.
The IMF program is the SBA loan program....the paris club debt is part of the debt restructuring plan that the IMF had as a stipulation for Iraq to get their debt down.....they had to apply for and obtain the SBA loans (didn't have to use them) as a prerequisite to get the paris club debt relief that is given in 3 increments and based on completion of the IMF stips....another stipulation was that the 2 banks had to be updated and restructured and balance sheets ready and updated by June 30th 2010 (so as you can see we are behind schedule as weve just seen the articles about the banks being updated recently)
........there are strings attached to the debt relief and one of those is to restructure their economic environments by redenominating their currency.....so....having said that...if they dont hold their end of the bargain...then the debt relief can be rescended and all the debt come back to them.....this is all interrelated as part of THE PLAN.....THE SBA LOANS...THE PARIS CLUB DEBT RELIEF....THE RV....thusly bringing iraq back into the international community to be able to trade and become the powerhouse that they can be while the USA becomes the biggest benefactor of this plan with the petrodinar and our reserves...
the plan in action....the Paris Club members re reduce debt to Iraq
this is the program that shows the pathway thru the IMF that Iraq has to follow to become internationally traded once again.
another good quote to show the link between the SBA, Paris Club debt restructuring and economic reforms. "At such time (between one and three years) when there is a performance record of
Iraqi compliance with IMF loan conditions and on-time payments to Paris Club creditors,
the second stage would begin. This stage includes a second arrangement with the IMF.
For countries with debt sustainability problems that are treated under the Evian Approach,
none of the Paris Club’s standard terms would be used. A full range of treatment options
from additional rescheduling to debt reduction would be considered. In the third stage,
after successful implementation of the subsequent IMF program, the debt treatment would
be completed. Under this staged approach, Iraq would only receive the full benefits of
debt relief (at stage three) if it makes substantial economic reforms throughtout the treatment process.."
this proves that it behooves them to follow thru with IMF stips and agreements for them to receive their debt relief benefits and economic reform is one of the stips....they do not want to have all that debt to come back to them ...this holds their feet to the fire