Iraq is to pass a supplementary budget in order to secure an $800m loan tranche from the International Monetary Fund.
The war-torn country is currently working through a three-year $5.34bn programme with the fund, with aims including restoring balance to the public finances, achieving debt sustainability and curbing corruption.
Release of the $800m loan, which follows a $600m tranche released at the end of last year, is subject to the country passing an agreed supplementary budget for 2017 and strengthening spending controls.
While an agreement, which also outlines objectives for the 2018 budget, has been reached between Iraqi authorities and IMF staff, the fund’s executive board will need to give the deal final approval.
Christian Josz, IMF mission chief for Iraq, said the agreement will be put to the board “once prior actions have been implemented”, possibly in August.
“Both the supplementary budget and the 2018 budget will keep fiscal consolidation, necessitated by the fall in oil prices, on track, while protecting social spending.”
Iraq’s economy has been ravaged by conflict and insecurity, with the sustained slump in oil prices compounding these ongoing issues. Oil used to account for 95% of all government revenues.
As a result, the country has spent the last few years wrestling to bring down a budget deficit that has repeatedly surpassed $20bn (more than 10% of GDP), with much of the available revenues sucked up by the war against Isis militants.
The government is forecasting a deficit of $19bn for 2017.
The IMF did not reveal the size of the expected budget supplement. The 2017 budget, passed in December 2016, envisaged spending of $86bn – a 6% decrease on 2016 levels.
- Emma Rumney
Emma is a reporter at Public Finance International. She also writes for Public Finance in the UK.
Source: Public Finanz International 6 Jun 17