The Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation with Iraq, under which the Iraqi economy is assessed.
“The outlook for growth is positive over the medium term, and 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,” the IMF said in a statement. Is still very high, mainly due to volatile security conditions, political tensions and weak implementation of policies. ”
The fund supports Iraq through its three-year standby credit facility of SDR 3.831 million (US $ 5.380 billion), equivalent to 230% of its membership.
The Executive Directors agreed on the overall line of assessment of the Fund’s experts, welcoming the policies developed by the authorities to deal with the shocks of armed conflict with the Dahesh organization and the ensuing humanitarian crisis and falling oil prices.
“The outlook for growth is likely to be positive in the medium term, but the medium-term outlook remains highly volatile due to volatile oil prices, security instability, political tensions and weak management capabilities.”
“Although the performance under the credit agreement was weak in some key areas, understandings were reached on corrective action to keep the program on track.”
“In this context, 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.”
Directors pointed to fiscal discipline in 2016, albeit slower than the program, due to poor monitoring of investment spending and spending pressures imposed by the military campaign against a sympathetic organization and assistance to IDPs and refugees.
To strengthen stability in the financial sector, managers urged the authorities to take measures to strengthen supervision, move ahead with plans to restructure state-owned banks that control the banking system, urge them to 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 peg to the US dollar, which is the cornerstone of the economy, remains an appropriate system.
Managers emphasized the importance of implementing structural reforms to improve the investment climate, diversify the economy and achieve sustainable growth, and call on the authorities to undertake a comprehensive reform of public finance management, including regular inventory replenishment, payment of arrears and improved commitment to expenditure and cash management to prevent new arrears from accruing.
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.
It is anticipated that the next Article IV consultations with Iraq will be held in accordance with the decision of the Executive Board on the consultation process with member countries associated with agreements with IFAD.
Source: Face Iraq