IMF: Favorable Medium-Term Outlook For Iraqi Economy
The International Monetary Fund announced Monday that it has
concluded its annual review of Iraq's economy, finding it has a
favorable outlook in the medium term but faces major challenges
over the longer haul.
Lower oil prices are weighing on Iraq, and are estimated to have
slowed growth to 4% in 2009, down from about 9.5% in 2008,
according to an IMF staff assessment provided to the IMF board of
directors last week and issued Monday.
"Iraq's longer-term economic outlook is strong as oil prices and
production are projected to increase markedly in the coming years,"
the IMF said. However, based on conservative assumptions regarding
oil prices, it projects Iraq will continue to run deficits this
year and next before returning to a budget surplus in 2012.
Iraqi authorities have received about $3.6 billion from the IMF
along with additional funding from the World Bank and other donors
to cover the near-term funding gap. Going forward, IMF directors
highlighted the need for Iraq to contain government spending on
wages, allowing it to bolster spending in other areas, including
improving the oil-sector infrastructure. They also encouraged Iraq
to broaden its tax base by introducing a general sales tax.
On monetary policy, the IMF supported Iraq's central bank for
seeking to keep core inflation at single-digit rates and called on
authorities to remove remaining exchange-rate restrictions.
IMF officials praised Iraq for making substantial progress in
reducing inflation, eliminating direct government subsidies for
fuel consumption and putting its pension system on a more
sustainable footing. It also applauded Iraq for making important
advances in addressing its long-term debt load, while noting the
process of bilateral debt negotiations hasn't been completed as
-By Judith Burns, Dow Jones Newswires, 202-862-6692;