The executive board of the International Monetary Fund (IMF) approved SDR 891.3 million ($1.24 billion) to help Iraq address its 2015 balance of payment and budget needs in 2015 related to the campaign against ISIS and lower oil prices, the IMF announced today.
The financing will support the authorities’ economic program, incouding fiscal adjustment measures and structural reforms.
issued the following statement:
“The twin shocks faced by Iraq from the ISIS insurgency and the drop in global oil prices have severely widened the government deficit and caused a decline in international reserves,” IMF deputy managing director and acting chair of the IMF executive Board Mitsuhiro Furusawa said in a statement. “The authorities’ policies to deal with the shocks, including sizable fiscal adjustment and maintenance of the exchange rate peg, go in the right direction. Access under the IMF’s Rapid Financing Instrument will help address Iraq’s urgent balance of payments and budget needs. However, large fiscal and external financing gaps remain.”
Rigorous implementation of the government policies, additional fiscal adjustment measures and identification of domestic and internal financing are required, the IMF said.
“In this context, it will be important to implement the new electricity tariff schedule as soon as possible, or adopt compensatory measures,” Furusawa said. “Looking ahead, the authorities should lay the ground for medium-term structural reforms that would better support macroeconomic policy management and boost the economy’s resilience to shocks.”