IMF Praised Iraq’s Actions to Achieve Comprehensive Economic Development
International Monetary Fund praised Iraq’s actions to achieve comprehensive economic development
The International Monetary Fund on Tuesday praised the government’s measures aimed at achieving comprehensive economic development through controlling and reducing spending, encouraging investment and going to the private sector as well as serious steps towards maximizing its non-oil revenues in order to avoid or reduce the budget deficit by moving away from total dependence on oil as a basic resource. However, the Fund revealed through its indicators of the overall financial and economic situation in Iraq for the period from 2013 to 2022 the arrival of the size of the public debt to Iraq to 122.9 billion dollars, which constitutes 63.8% of the gross domestic product, expected to reach public debt in 2018 to 132 4. The Fund’s expectations continue to reach 132.9 in 2022.
UNFPA, through the Executive Directors’ assessment on the margins of the conclusion of the IV Article IV Executive Board with Iraq, welcomed the policies set by the Iraqi Government to deal with the shocks of armed conflict with ISIS and the humanitarian crisis resulting from the waves of displacement and its aftermath, as well as the second shock of falling crude prices.
The outlook for growth in Iraq is positive in the medium term. Growth will be driven by the moderate increase in oil production, the recovery of non-oil growth, supported by the expected improvement in security conditions, and the implementation of structural reform measures.
CEOs applauded the fiscal achievement of 2016, albeit slower than the program, due to poor monitoring of investment spending and expenditure pressures imposed by the military campaign against Isis and assistance to internally displaced persons and refugees. Managers welcomed the achievement of most of this fiscal discipline by cutting capital expenditure Efficiency while protecting social spending.
Directors also welcomed the adoption of the 2017 Supplementary Budget and the Government’s commitment to further austerity measures in 2017-2018 to keep the program on track and to ensure the safety of the external center and to maintain the level of debt within sustainable limits, and stressed the need to create financial space to strengthen human capital and rebuild capital The low level of non-tax revenue and the extremely high level of public consumption would create a financial space to finance growth-supportive investments.
The IMF pointed to the appropriateness of the government’s procedures which were able to maintain the exchange rate system pegged to the US dollar. He stressed that with the central bank simplifying the documentation requirements, exchange rate differences compared to the parallel market narrowed to 6% in June 2017.
The IMF, in its assessment of the overall economic and financial situation in Iraq, stressed that although performance under the credit agreement was weak in some key areas, understandings were reached on corrective action to keep the program on track. Against this background, they urged managers to persevere in implementing the authorities’ program, including continued efforts to control public finances, strengthen the financial sector, implement structural reforms to encourage private sector activity and improve the business environment.
To strengthen stability in the financial sector, managers urged the government to take measures to strengthen supervision, move ahead with the restructuring of state-owned banks that control the banking system, and strengthen the central bank’s legal framework, And accelerate the implementation of measures against money laundering, financing of terrorism and combating corruption. Directors believed that the currency peg to the US dollar, which is the cornerstone of the economy, remains an appropriate system.
Directors also stressed the importance of implementing structural reforms to improve the investment climate, diversify the economy and achieve sustainable growth. They urged the authorities to undertake a comprehensive reform of public financial management, including the completion of a regular inventory, payment of arrears and improved commitment to expenditure and cash management to prevent the accumulation of new arrears.
Managers also emphasized the importance of addressing weaknesses in management capacity and data availability. In addition, the implementation of the budget-sharing agreement between the federal government and the Kurdistan Regional Government would put the two governments in a better position to deal with shocks.
The International Monetary Fund revealed through its indicators of the overall financial and economic conditions in Iraq for the period from 2013 to 2022 on the arrival of the volume of public debt to Iraq to 122.9 billion dollars, which constitutes 63.8% of gross domestic product, expected to reach public debt in 2018 to 132.4 and continue to The fund forecast to reach 132.9 in 2022.