IMF Executive Board Concludes 2019 Article IV Consultation with Iraq

July 26, 2019

On July 19, 2019, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with Iraq.

An improved security situation and the recovery in oil prices have improved near-term vulnerabilities. Large fiscal and current account surpluses—around 8 and 6 percent of GDP, respectively—were recorded in 2018, allowing the government to retire domestic debt and accumulate fiscal buffers. Gross international reserves reached $65 billion by end-2018.

However, post-war reconstruction and economic recovery have been slow. Non-oil GDP rose by only 0.8 percent year-on-year in 2018 in a context of weak execution of reconstruction and other public investment. Overall GDP contracted by around 0.6 percent as oil production was cut to comply with the OPEC+ agreement.

The 2019 budget implies a sizable fiscal loosening that will reverse the recent reduction in vulnerabilities. Current spending is expected to increase by 27 percent year-on-year, in part due to a higher public sector wage bill, while revenues will be dampened by the abolition of non-oil taxes. As a result, the budget is projected to shift to a deficit of 4 percent of GDP in 2019, and reserves are projected to decline.

The fiscal and external positions are expected to continue to deteriorate over the medium term absent policy changes—with reserves falling below adequate levels and fiscal buffers eroded. Although the level of public debt will remain sustainable, gross fiscal financing needs will increase. Non-oil GDP growth is projected to reach 5½ in 2019 but subside over the medium term.

In a context of highly volatile oil prices, the major risk to the outlook is a fall in oil prices which would lower exports and budgetary revenues, leading to an even sharper decline in reserves or higher public debt. Geopolitical tensions, the potential for social unrest in a context of weak public services and lack of progress in combatting corruption pose further risks.

Executive Board Assessment [2]

Executive Directors agreed with the thrust of the staff appraisal. They were encouraged by the recent strengthening of Iraq’s economy but recognized that the country continues to face daunting challenges. Social conditions remain harsh, post-war reconstruction progress is slow, development needs are large, and institutional weaknesses are significant. Volatile oil prices and a difficult regional and geopolitical environment pose additional difficulties. Directors encouraged the authorities to seize the opportunity presented by the improved security situation and higher oil prices to implement policies and structural reforms aimed at ensuring macroeconomic and financial stability, tackling long-standing social problems, and promoting sustainable and inclusive growth.

Directors emphasized that building a robust fiscal framework is essential to maintain fiscal and macroeconomic stability and strengthen buffers. They encouraged the authorities to adopt a risk‑ and rules-based approach to fiscal policy as part of broader reforms to manage oil revenue more effectively, reduce tendencies for procyclicality, and shift to a more growth-friendly composition of expenditure. Directors supported scaling up reconstruction and development expenditure gradually in line with improving absorptive capacity. They underscored the need to strengthen public financial management to ensure public spending is appropriately monitored and to reduce vulnerabilities to corruption. In this context, Directors welcomed the newly adopted General Financial Management Law and encouraged its full implementation.

Directors emphasized that gradual fiscal adjustment, including containing current primary spending and boosting non-oil revenues is essential for maintaining fiscal and debt sustainability. They recommended that spending measures should give priority to containing the growth in wage bill and lowering subsidies to the electricity sector. Directors emphasized that the poorest and the most vulnerable must be protected from the adjustment process.

Directors underscored that an overhaul of the banking sector is necessary to maintain financial stability. They encouraged the authorities to restructure the large state-owned banks, enhance their supervision, and implement other reforms to increase financial intermediation. Directors highlighted the benefits of increasing financial inclusion, especially for the SME sector, which has a large potential to absorb entrants to the labor market.

Directors agreed that building public institutions and enhancing governance is key for success, and highlighted the scope for Fund capacity development to support these efforts. They welcomed progress in developing an anti-corruption framework and called for further modifications to the legal regime for combatting corruption coupled with stronger coordination between the relevant government agencies, while continuing to strengthen the framework for Anti-money laundering and combatting the financing of terrorism (AML/CFT). Directors also recommended strengthening Public Investment Management framework to ensure that spending is well directed and that donor funds targeting reconstruction are put to the most efficient use.

Directors looked forward to continued close engagement between the authorities and the Fund in the context of post program monitoring.

[1] Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm .

His office illustrates the fact that Maliki was involved in large corruption deals related to military contracts with a US company

Baghdad today: The Office of the President of the coalition of state law, Nuri al-Maliki, on Friday (July 26, 2019), on charges of involvement in corruption deals related to military contracts with a US company.

“A reference to the allegations contained in the July 24, 2016” The Daily Beast “report, under the heading” Suspicious Connections of a Retired General from the United States made it Rain in Iraq, “the office said in a statement received by Baghdad today.

1. As far as the responsibility of Nuri al-Maliki is concerned, his legal adviser denies these allegations, which are detailed in the report.

2. Repeated publication of the report many times at close intervals without a single document supporting his claims that it is intended to implicate Iraqi national figures with the US sanctions file, which appears to be based on the principle of monopoly of power and the imposition of international tutelage on independent governments and political figures.

3. We are surprised by the local media, which rushed to publish these false allegations, which include political targeting exposed and not based on any official source or legal status, without taking comment from the other party in the case according to the customs of the press profession, knowing that our office is open to colleagues We have never hesitated to answer any information.

On Thursday (July 25, 2019), the US Daily Daily reported that former Prime Minister Nuri al-Maliki, with his son-in-law and son, had been involved in major corruption deals involving military contracts with a US company.

The report cited a senior US military figure, retired Lieutenant-General Frank Helmick, known as the “extraordinary officer,” who was given by David Petraeus, a senior general who worked in Iraq and left with the withdrawal of US troops in 2011, to return to Iraq after about a year, but the tasks of “brokering” this time.

The report focuses on what he described as the “suspicious links” of the American general with senior Iraqi government leaders such as former Prime Minister Nuri al-Maliki and his narrow circle, where the probe places these suspicious transactions in the mirror of major deals and “subcontract” contracts, About the assets of the military bases in Iraq, where the names are known to companies such as: Susi, Afaq, Saliport, and saw the East, and places such as: Camp Taji, Balad air base.

Baghdadtoday.news

Parliament is seeking to lift the immunity of 30 deputies on various charges and calls on the government to provide ministers “corrupt” to the to the judiciary

Baghdad today – The Council of Representatives is preparing to lift the immunity of deputies required to judge on various charges ranging from defamation and corruption, while the political blocs in the Council confirmed its support to the claims of the Supreme Judicial Council on this file, a judicial expert that the parliament did not lift the immunity of one of its members since the start of the first session In 2006 only one case was overturned by the Federal Court.

“The parliament continues to lift the immunity of deputies required for the judiciary because it is a legal and constitutional action and the deputy must defend himself before the judiciary,” said deputy head of the parliamentary legal committee Mohammed al-Ghazi.

Al-Ghazi said in a press statement: “For the ministers addressed corruption charges, which the Prime Minister said they must be referred to the judiciary before the declaration, because they do not enjoy immunity, whether they are former or current, so the legal procedures are easy to be held against them,” calling the Prime Minister as the President The Anti-Corruption Authority “to proceed with the investigation procedures and refer the wanted parties to the concerned parties as they are considering these matters until proven guilty or not.”

He added that “the Supreme Judicial Council earlier in the House of Representatives with the presence of personalities have become members of parliament and had previously held executive positions in previous governments directed to some charges of corruption, and the House of Representatives to lift immunity from them as well as current deputies,” adding that “The number of more than 30 deputies ranging between charges of libel and defamation and other charges of corruption.”

“The law must take its course, and the lifting of immunity constitutional and legal process, and the House of Representatives to agree so that the MP can defend himself in front of the judiciary,” noting that “the parliament will not take any action because the subject has become the hands of the judiciary.”

In turn, the National Wisdom bloc confirmed its support to the Supreme Judicial Council to lift the immunity of some deputies who were holding executive positions.

“We are demanding that the Supreme Judicial Council lift the immunity of some of the deputies who were in executive positions and have files of corruption open to the judiciary,” said MP Khaled al-Geshmi, stressing the need to lift immunity for them to appear before the judiciary.

“The Presidency of the Council of Representatives to refer the request of the Supreme Judicial Council and the Iraqi courts to lift the immunity of the deputies, who have files and convert them with documents to the relevant committees to study them so as not to be malicious things,” noting that “immunity was placed to protect the deputy in the case of the deputy corruption cases Or a particular opinion. ”

He pointed out that “there are 40 books arrived from the courts to the House of Representatives to lift the immunity of some MPs,” adding that “the 40 books do not mean that the number of 40 deputies, but there may be more than one file for one deputy,” stressing the need for “discrimination Between financial and administrative corruption and statements and publishing courts, and we are against lifting the immunity of MPs in the event of expression of opinion or statements, “and called« the Presidency of the House of Representatives to transfer the requests of the courts to the parliamentary committees competent to study and put on the agenda ».

For his part, considered the MP for the coalition of the Raed Fahmi Fahmi, that lifting the immunity of any deputy at the request of the judicial does not represent a conviction, but is an administrative procedure to facilitate the work of the judiciary.

Fahmy said in an interview: “The request to lift the immunity of some MPs did not come from a political point of view, but from the judiciary, which means that it is based on documents and documents, and therefore the proof of innocence is through going to the judiciary and the implementation of those charges,” noting that «lift Immunity does not mean that the MP convicted, but a procedural step will not affect something negative in the MP is to facilitate the work of the judiciary ».

Fahmy added that “we do not want the subject of immunity to be selective, especially as the House of Representatives has placed its priority on the fight against corruption.” He added that “respect for the independence of the judiciary makes us obliged to deal with such requests in a transparent manner away from any sense.”

In the same context, the legal expert Tariq Harb, the parliament has not lifted the immunity of any deputy since the first session in 2006.

In a statement, Harb said in a statement: “It did not happen that the parliament lifted the immunity of any deputy since the first session in 2006,” noting that “there is one case occurred in 2008 when the immunity of MP Mithal al-Alusi was lifted and the Federal Court revoked the parliament’s decision to lift immunity from this The deputy for unconstitutionality », adding that« returned to parliament before taking legal action against him and close the investigation ».

The head of the Supreme Judicial Council Judge Faik Zaidan has called on Monday, the House of Representatives to lift the immunity of its members «accused of corruption issues» during their duties of executive, stressing cooperation between all organs in the field of integrity issues.

Source: Al-Sabah Newspaper

Baghdadtoday.news

Halabousi to visit Kuwait to activate the decisions of the Kuwait International Conference for the reconstruction of Iraq

Parliament Speaker Mohamed Halboussi will begin an official visit to Kuwait at the head of a high-ranking delegation to discuss the results of the Kuwait International Conference on the Reconstruction of Iraq held in February last year.

The Iraqi delegation will discuss with Kuwaiti officials ways to invest the funds launched by the Kuwait conference, which amounted to more than 30 billion dollars in the form of loans and investments to rebuild what was destroyed by the war on terrorism.

Dijlah.tv

Iraqis begin to transfer their financial assets to Iran for fear of new US sanctions affecting 76 people

BAGHDAD (Reuters) – Iraqi figures linked to close ties with Iran have begun to transfer their financial assets to them, fearing new US sanctions would prompt the central bank to freeze their assets, a Gulf report said.

The report, which was published by the Saudi newspaper Asharq Al-Awsat on Saturday, July 27, 2019, said that most of the circles close to the figures and the relevant Iraqi authorities from Iran are now feeling a real danger to their interests and the movement of their funds in Iraq and some Arab countries, especially after the US Treasury sanctions that have lengthened Four figures, on charges of corruption and violations of human rights, namely: the commander of the «Brigade 30» in the popular crowd »Pinoy, the network of the promise of the Almighty, the Chaldean Christian leader of the« 50th Brigade »in the« crowd »also in Benin, Ryan Chaldean, The former, Nofal al-Akoub, and the head of the “Axis” gang Ahmed Al-Jubouri.

The Central Bank of Iraq, Thursday 25 July 2019, circulated a circular to the rest of the banks and financial institutions, on the lack of financial dealings with the four figures listed on what he called «international sanctions».

“Your institutions should know the names on the list of international sanctions on 17-7-2019,” the bank said in its circular. He added: “If any name has a deal or account with your institutions, it is frozen and prevent any financial deal with the bank, and prevent access to the currency of the dollar, and provide this bank with all bank accounts and any other information of his own.

The newspaper quoted a source who said he knew the details of what is happening in the circles close to Iran, that «some Iraqi personalities are moving strongly these days, to transfer part of their investments and funds to various regions and banks in Iran, to avoid the sanctions expected against them by the US Treasury».

“Many of these people are now aware that they are targeted by the American side, and will later include a new wave of sanctions, and believe that Iran is the only country where their money can be free from US sanctions. Most of the money comes out in different ways, Wild, because it can not be transferred through official banks ».

He believes that “targeting the US Treasury for four figures marks the beginning of the serious US-Iranian conflict in Iraq, given that Americans know that Nineveh was increasingly influenced by Iran’s groups during and after the war against the Da’ash organization.”

“There are other US lists on the way,” he said. “There are dozens of Iraqi figures in the Shiite and Sunni regions, including political leaders and leaders of armed factions,” indicating that “the total number of characters that will include US sanctions is around 76.”

Allhayat.net

In the document .. The Council of Ministers sends the names of 6 personalities to Parliament for appointment with a number of special grades

Baghdad today – Recommended to the Secretariat General of the Council of Ministers, a recommendation to Parliament to vote on the names of candidates for positions of special grades, including the Governor of the Central Bank to the House of Representatives after the approval of the Council of Ministers.

(Baghdad today) received a document issued by the Secretariat General of the Council of Ministers and addressed to Parliament, including the names of candidates for the positions of special grades, after obtaining the approval of the Council of Ministers on July 23, 2019.

The names are: Ali Abdul Amir Allawi for the post of Governor of the Central Bank of Iraq, Salah Nuri Khalaf for the post of Chief of the Financial Supervisory Bureau, and Mohammed Abdul Hadi Mohammad Taqi Hakim for the post of adviser to the Prime Minister, Fayadh Hassan Nima for the post of Undersecretary of the Ministry of Oil, and Hamid Yunis Saleh Zobaie for the post of Undersecretary of the Ministry of Oil , And Adel Karim Kak Ahmed as undersecretary of the Ministry of Industry.

Alahadnews.net

Iraq “issues Warrants for 26 Top Officials”

By John Lee.

The Iraqi government has reportedly issued warrants for 26 former and current top officials, including 11 ex-ministers, who are suspected of corruption.

According to the Organized Crime and Corruption Reporting Project (OCCRP), the warrants issued included 15 to director generals.

Sources told Asharq Al-Awsat that none of the warrants are for current members of the cabinet, and that some of the ministers live abroad and would require extradition in order to be charged.

(Source: Organized Crime and Corruption Reporting Project)

Iraq-businessnews.com

The bank denies the transfer of some social media to the smuggling of the Iraqi currency.

Some social media outlets broadcast a video clip showing some categories of the Iraqi currency in boxes marked with the name of the Central Bank of Iraq, which provoked a crackdown on smuggling of the Iraqi currency. While the bank denies any smuggling operation, it would like to state the following:

1. The funds offered do not belong to the Central Bank, and differ from the special funds in the Iraqi currency in terms of shape, color, material and size.

2. The Central Bank followed up with the security authorities, the Ministry of Foreign Affairs and embassies of the countries mentioned in the video clip. Note that there are previous cases proved by the search, by the security services, not completely correct.

3. So far, these papers have not been found and have not been publicly displayed in any country, and the current investigations have proved to be only pictures and films.

4. The central bank prints its currency in the global printing houses, and monitors its production, from the paper making to the final version, according to tables and serial numbers to check every stage until it is received in Iraq.

5.We warn of the confusion that is taking place with the aim of undermining the country and its successful institutions, including the Central Bank. The sooner one of these institutions succeeds domestically and internationally, the more they come under such slander. The attack comes in line with the announcement of the bank’s growth of reserves and control of the exchange rate, in order to reduce this success.

Finally, the central bank calls on all media to be careful in dealing with the news, because inaccurate news has negative effects on the stability of the banking and financial system in Iraq.

Central Bank of Iraq

Parliamentary Finance: The budget will be different orientations within the next year

Al-Ahed News – Baghdad: The Finance Committee of the parliamentary, on Sunday, an agreement with the Ministry of Finance to send the budget for 2020 at the scheduled date, indicating that it is continuing to hold meetings with the government to include all items of the budget by consensus.

“The Ministry of Finance has assured us during several meetings to send the 2020 budget in October, the legal date specified,” committee member Haneen al-Qaddu said in a press statement.

He added that “meetings between the Finance Committee and the representative of the government departments are continuing to identify the needs and include them within the federal budget.”

He explained that “the budget will be different orientations within the next year to represent the economic openness of the government to invest and increase the financial resources alternative to oil.”

Alahadnews.net

National Union: Baghdad and Erbil agreement on the outstanding issues before the submission of the budget 2020

Baghdad – The bloc of the Patriotic Union of Kurdistan in the House of Representatives, on Sunday, the need to reach the governments of Baghdad and Arbil to agree on the outstanding issues before the submission of the budget 2020.

The head of the bloc, Joan Ihsan, said that “the recent visit of the delegation of the Kurdistan region to the capital Baghdad was a positive step And very good, and indicate the intention of the Kurdistan Regional Government and the federal government to resolve the outstanding problems.

She added that “the House of Representatives will be after the legislative holiday to discuss the preparation of the budget year 2020.”

“It is possible that the Kurdistan Regional Government and the federal government to reach a comprehensive agreement on all outstanding problems, especially financial ones.”

Mawazin.net