The Fund’s mission met with representatives of the Iraqi government. Conflicts and oil’s low prices drove the country’s GDP down 2.1% in 2015, but the organization sees improvement in fiscal policies.
São Paulo – In the last few days, a mission from the INTERNATIONAL Monetary Fund (IMF) met with representatives from the Iraqi government in AMMAN, Jordan, for a Staff-Monitored program review on the country’s economy and to start negotiations of an agreement of the type “Stand-By Arrangement”, the Fund’s main loan mechanism, used to help countries to pay their debt in moments of crisis.
In a statement released this Tuesday (29), the head of the IMF’s mission, Christian Josz, reported on the Iraqi economy. According to him, the Gross Domestic Product (GDP) contracted 2.1% LAST YEAR owing to the ongoing armed conflict with ISIS, destruction of infrastructure and assets, disruptions in trade and deterioration of investor confidence. The executive points out that the number of internally displaced people due to the conflict is now reaching over 4 MILLION people.
In addition to this, the country was hit by the steep fall in oil international prices, which caused a large external shock to the balance of payments and budget revenues. Iraq is dependent on revenues coming from the exports of the commodity. The increase in oil production helped mitigate the negative effects brought by the fall of prices. The current account deficit of the country reached 5.1% of the GDP and international reserves dropped USD 13 billion to USD 54 billion at the end of 2015.
Despite this negative outlook, the Fund’s representative says that the government has made good progress in macroeconomics, with three out of five targets set within the monitoring program were achieved until December of last year. Spending with wages and pensions, goods and services and transfers were cut. The target on social spending was missed by a small margin, and the target on non-accumulation of external arrears was missed due to the government’s cash constraint.
The statement also reports that only one out of three structural benchmarks was met, but that progress is being made concerning the other two. According to the statement, representatives of the IMF and of the Iraqi government have made good progress towards reaching an understanding on a program of economic and financial policies that could be supported by financing by the Fund. The discussion on this topic will be resumed in April, during the 2016 IMF-World Bank Spring meetings Washington, D.C., United States.
The representatives of the Iraqi government that took part in the discussions with the Fund’s mission were the minister of Finance, Hoshyar Zebari, and the acting governor of the Central Bank of Iraq (CBI), Ali Allaq.
*Translated by Sérgio Kakitani
Source: Arab Brazilian Chamber of Commerce, 29/03/2016