Iraqi authorities and the staff of the International Monetary Fund (IMF) held discussions in Amman from September 17 to 28, 2017, on the third review of the country’s 36-month Stand-By Arrangement (SBA).
The Iraqi delegation was headed by Acting Governor of the Central Bank of Iraq (CBI), Dr Ali Mohsen Ismail Al-Allaq, and Acting Deputy Minister of Finance, Dr Maher Johan, and also comprised top representatives from the Prime Minister’s office, ministries of finance, oil, planning, and electricity.
Christian Josz, Mission Chief for Iraq, praised the open and productive discussions and later issued a statement saying: “The Iraqi authorities and IMF staff started discussions on the third review of the SBA and made good progress towards reaching agreement on a draft 2018 budget in line with the SBA. These discussions will continue during the upcoming IMF and World Bank Annual Meetings from October 13 to 15, 2017 in Washington, DC.”
Recent payments history
The IMF Executive Board had approved a three-year $5.34 billion (AED19.6bn) SBA on July 7, 2016, a sign that the Fund was willing to back the Iraqi government’s economic reform agenda.
That 2016 announcement had followed a previous payment exactly one year earlier, when Iraq received approximately $1.24bn (AED4.5bn) under the IMF’s Rapid Financing Instrument.
Iraq, like many MENA/GCC oil producing countries, is feeling the effect of lower global oil prices.
It current average production is 4.5 million barrels per day, according to US based Trading Economics, which provides historical data for more than 20 million economic indicators worldwide.
Iraq has the world’s fifth largest proven petroleum reserves after Venezuela, Saudi Arabia, Canada, and Iran.
What’s stopping development?
The country has large potential for further oil field development and as such more proven reserves may not have yet been discovered, but Iraq is hampered by high levels of corruption keeping it from moving forward with robust economic aganda.
The country is positioned a low 166 out of 176 nations, according to a corruption index by Transparency International.
Iraqi Prime Minister Haider Al Abadi recently announced: “Corruption is a scourge and we will work to combat it and to defend justice and prevent corruption from creeping in.”
Kirkuk, located in the Kurdish Regional Government (KRG) region of Iraq can produce more than 1m barrels a day and is believed to have nearly 9bn barrels of reserves. However, Iraq is currently fighting a referendum by the KRG to seek independence from Iraq.
Iraq is also coming out from a fierce and costly battle with ISIS to liberate major cities the terrorist group had taken control of.
“Iraq’s economic reform program, supported by the SBA, aims to address the urgent balance of payments need, bring spending in line with lower global oil prices and ensure debt sustainability,” said the IMF when it approved the SBA.