IMF agrees deal to help ailing Iraqi economy

ANKARA

The International Monetary Fund (IMF) on Tuesday agreed a deal to unlock further financial aid for Iraq as it faces the consequences of its costly conflict with Daesh and falling oil prices.

In a statement, the IMF’s Iraq mission chief Christian Josz said Baghdad would be eligible for a “possible… financing arrangement” under a “staff-monitored program” to introduce economic reforms.

These measures include “fiscal consolidation that will contain public expenditure in line with available revenue and financing and aim to reduce the non-oil primary deficit by 4 percent of non-oil GDP between 2014 and 2016.”

The deal also calls for Iraq to strengthen the management of public finances and anti-money laundering measures as well as countering financing for terrorism and creating stability in the financial sector.

The deal was arranged during a 10-day visit by Josz to Jordan.

“Iraq continues to face a number of challenges,” he said. “Key among those is the ongoing armed conflict with ISIS [Daesh], which continues to strain the country’s resources and results in new waves of internally displaced people”.

He added: “The other key challenge is the fall in oil prices, causing a large external shock to the balance of payments and the budget revenue, which depends predominantly on oil export receipts.”

The IMF’s monitoring program will start at the end of the year.

According to IMF, the country's GDP should grow by 1.5 percent in 2015 due to an increase in oil production, and the current account deficit should increase to 7 percent of GDP in the year.

“The foreign exchange reserves, which amounted to $59 billion at end-October 2015, should decline but still amount to 9 months of imports of goods and services at the end of 2015,” Josz said.

The program will be submitted to IMF management for consideration by the beginning of 2016.