Two-year Stand-By Arrangement (SBA) in the amount of SDR 2.38 billion (about US$3.8 billion), approved by the IMF's Executive Board on February 24, 2010.
The IMF's Executive Board completed the first program review on October 1, 2010, and the second review on March 18, 2011, bringing the total resources currently available to Iraq under the arrangement to SDR 1069.56 million (about $1.7 billion).
At the time of the second review, the program duration was extended by five months to July 2012,along with a rephasing of program disbursements based on a shift in financing needs from 2010 into 2011.
♦ SEE POST 2
Iraq is estimated to have the world’s second-largest oil reserves, with reserves of 143 billion barrels.
By the 1970s, Iraq’s oil resources had enabled the country to reach middle-income status, with a modern infrastructure, and good education and healthcare systems. Since then, however, the country has suffered through three devastating wars, a long period of economic and financial mismanagement, and international sanctions imposed during the 1990s. These events severely damaged political and economic institutions and undid earlier economic and social gains. By 2004, per capita GDP had fallen to less than US$800 from US$3400 in 1980, and the country suffered from a crippling debt burden.
The task of rebuilding the country after 2003 remains immense and is made harder by sectarian politics and prolonged violence.
Iraq’s reconstruction requires not only the rebuilding of its infrastructure, but also of its economic and social institutions and the creation of a business environment that attracts capital and brings with it new technology and skills to modernize the economy.
♦ REBUILDING THE "ECONOMIC SECTOR" IS WHAT IS MOST IMPORTANT TO ME.. AS WE HAVE STUDIED IN THE IMF AND WORLD BANK DOCUMENTS, THE COUNTRY'S CURRENCY SHOULD REFLECT THE COUNTRY'S GDP.. GROSS NATIONAL PRODUCT ~~ RED
Iraq’s huge oil reserves could, in principle, provide the revenues needed to finance the reconstruction, but strong institutions and favorable business environment are needed to use these resources effectively.
The longer-term outlook is strong as domestic and foreign investment in the hydrocarbon sector is bearing fruit. According to the Ministry of Oil, oil production reached 3.3 million barrels per day (mbpd), of which 2.6 mbpd are exported, and extraction and exports are projected to increase considerably in the years ahead.
Nevertheless, Iraq’s economic prospects continue to be subject to significant risks, deriving mainly from institutional and capacity constraints, oil prices volatility, delays in the development of oil infrastructure, and an extremely fragile political and security situation.
Role of the IMF
The IMF commitment to Iraq relies on two main pillars. First, the IMF is helping the authorities in their efforts to maintain macroeconomic stability as a key condition for economic growth and the generation of sustainable employment opportunities for Iraq’s large labor force.
Second, the IMF assists the Iraqi authorities in rebuilding essential economic institutions with its policy advice and technical expertise.
♦ WE SEE THIS STILL GOING ON IN THE NEWS TODAY.. ESPECIALLY RECENTLY WITH THE BUDGET AND THE WORLD BANK DELEGATION AND UST DELEGATION MEETING WITH THE MINISTRIES OVER IN IRAQ TO HELP IN THE "TRAINING" ONCE AGAIN ~~ RED
Government is discussing with the U.S. Treasury delegation reform the financial and banking situation
☛ Deputy U.S. Treasury Secretary David Cohen and his entourage, “discussed with the delegation reform financial situation and banking in Iraq,” noting that “the meeting dealt with support financial and banking system in Iraq and the review of Iraq’s efforts in the anti-money laundering activity.
Macroeconomic stability is at the heart of the IMF programs. With the support of four IMF programs, the macroeconomic situation of Iraq has improved substantially since 2003,despite extremely difficult security circumstances and periods of political uncertainty.
After experiencing inflation rates of 70 percent in 2007, the Central Bank of Iraq was successful in reducing inflation to the single digits, where it has remained since.
♦ FROM 70% TO SINGLE DIGITS??? WHO ACCOMPLISHED THAT??? WHERE IS SHABIBI NOW? ~~RED
The economy is growing with the revival of the oil sector and the improvement in the security situation. And with the support of the international community, debt levels have been brought down to sustainable levels.
Policy advice focuses on the fiscal, monetary and financial policy areas. In the fiscal area, major emphasis has been put on the adoption of policies that support the reconstruction of Iraq and preserve social spending, while maintaining medium-term fiscal sustainability.
In the monetary and financial areas, IMF advice has centered on keeping inflation under control, maintaining a broadly stable and liberal exchange rate regime, and modernizing the financial sector to enable the private sector to develop. IMF technical assistance has proven essential in helping the Iraqi authorities develop their institutional capacity and governance infrastructure.
The current program aims to continue to support the reconstruction of Iraq. Following the successful conclusion of Iraq’s second SBA program, the IMF’s Executive Board approved a new two-year SBA program on February 24, 2010 with an access of US$3.7 billion (SDR 2,376.8 million, or 200 percent of quota).
♦ OK HERE WE SEE THE APPROVED THE "SECOND SBA", FEBRUARY 24, 2010 SO THIS EXPIRED LAST YEAR CORRECT? I WILL LOOK FOR ANOTHER EXTENSION AS I GET ALL OF THESE AGREEMENTS MIXED UP AND CANNOT REMEMBER WHICH ONE IS EXTENDED ETC.. I BELIEVE THE ONE COMING UP ON EXPIRATION IS THE PROTECTION OF THE DFI FUNDS PERTAINING TO THE EXECUTIVE ORDER 13303.. SO IT IS EASY TO GET ALL OF THESE CONFUSED~~RED
UPDATE ON POST 2... SBA EXPIRED : February 23, 2013.
♦ LOOKING FOR ANOTHER EXTENSION ~~RED
♦♦ ARTICLE STATING DFI FUNDS EXPIRE IN MAY 2013 AND IRAQ IS ASKING FOR ANOTHER RENEWAL:
The program provided a macroeconomic framework supporting the reconstruction efforts during the political transition following the March 2010 parliamentary elections.
In line with past programs, the key objectives of the current SBA are the preservation of macroeconomic stability and the adoption of policies and measures to promote sustainable growth and poverty reduction. The financial resources envisaged in the context of the program were meant to be made available to respond to the drop in oil prices from their peak levels in mid-2008, which translated into a substantial deterioration of Iraq’s external position in 2009 and to a financing gap in the government finances.
Besides preserving macro-stability and providing budgetary support, the program also supports the authorities’ medium-term structural reform agenda.
This agenda relies on three key pillars:
Modernizing Iraq’s public financial management system.This encompasses improvements in the allocation, execution, transparency, and accountability of the mobilization and use of public resources.
Priority areas includeimproving budget preparation, reporting and cash management, public procurement, internal audit and control systems, and the accounting framework.
♦ IMPROVING BUDGET PREPARATION... REMEMBER IN JANUARY WHEN EVERYONE THOUGHT IT WAS RV'ING BECAUSE OF ALL THE "BIG IMPORTANT DELEGATIONS" IN COUNTRY?? THEY HAVE BEEN HELPING THEM WITH PREPARING THEIR BUDGETS FOR YEARS NOW.. THIS IS "NOT" OUT OF THE NORM IMO.. AND WE NEED TO BE LOOKING AT THINGS "OUT OF THE NORM".. TRY TO SEE WHAT IS "NOT" BEING SAID OR SHOWN TO US~~ RED
Developing the financial sector.
This pillar relies on enhancing Central Bank of Iraq (CBI) operations and promoting a banking sector that can provide basic financial services, including, crucially, to the private sector. Reinforcing central banking operations includes rebuilding the capacity of the central bank to conduct monetary and exchange rate policies, supervise banks, and manage the country’s foreign exchange reserves. The financial restructuring of the two main state-owned banks is an important step to help establish the conditions for the banking system to extend credit to the private sector.
♦ THE "TWO MAIN STATE-OWNED BANKS".. NOW THESE HAVE BEEN BROUGHT UP TO PAR I DO BELIEVE... AS I BELIEVE WE THOUGHT THE RV WAS AT HAND AT THAT TIME AS WELL.. UPDATING THE SYSTEMS OF RAFADIAN AND RASHEED BANKS ARE COMPLETED.. NOW THEY ARE PURSUING THE "SMALLER BANKS"... THE "PRIVATELY OWNED" BANKS.. BASED UPON THE ARTICLES I HAVE READ OVER THE PAST FEW MONTHS AND YEARS.. IMO ~~RED
Strengthening governance in the oil sector. As part of the authorities’ efforts to increase transparency and accountability in the oil sector, Iraq became a candidate member to the Extractive Industries Transparency Initiative (EITI) in February 2010, and produced its first EITI report in December 2011. Efforts in this area are also directed at completing the installation of oil metering systems, which will help reconcile oil production and export data with budget revenues from the oil sector, and at maintaining a single account for all oil export proceeds.
During 2012, the authorities succeeded in maintaining macroeconomic stability,but progress on the program has slowed down.
The combined third and fourth reviews have been delayed owing to limited progress in restructuring the state-owned banks and the emergence of distortions in the foreign currency markets that have led to the widening of the spread between the official and market exchange rates. IMF staff is working closely with the Iraqi authorities to address these issues and push forward the program agenda.
IMF Approves 7-Mth Extension of Stand-By Arrangement
Posted on 07 August 2012. Tags: IMF, International Monetary Fund, Stand-By Arrangement (SBA)
By John Lee.
The Executive Board of the International Monetary Fund (IMF) has approved a seven-month extension of Iraq’s Stand-By Arrangement (SBA), to February 23, 2013.
The SBA had been scheduled to expire on July 23, 2012. The extension, which had been requested by the Iraqi authorities, will provide them with time to implement the policy measures needed to complete the combined third and fourth reviews under the SBA.
The extension will, in particular, provide time for discussions on fiscal policies for the remainder of 2012 and on measures to improve the functioning of the exchange regime.
The two-year Stand-By Arrangement (SBA) in the amount of SDR 2.38 billion (about US$3.58 billion), was approved by the IMF’s Executive Board on February 24, 2010 (see press release 10/60). The IMF’s Executive Board completed the first program review on October 1, 2010 (see press release 10/373), and the second review on March 18, 2011 (see press release 11/90).
At the time of the second review, the program duration was extended by five months to July 2012, along with a rephasing of program disbursements based on a shift in financing needs. Total resources currently available to Iraq under the arrangement amount to the equivalent of SDR 1307.24 million (about $1.96 billion).