IMF releases $741m Loan to Iraq

The IMF (International Monetary Fund) said on Friday that it was releasing $741m [890 billion Iraqi dinars] in financing to Iraq after the country made good progress in reconstructing its war-torn economy.

AFP reports that the loan is the second installment of a 24-month loan the IMF awarded to Iraq in February.

The IMF executive board completed its first review of Iraq’s progress under a program supported by the loan, bringing the total resources currently available to Iraq to about 1.204 billion dollars, the Washington-based institution said in a statement.

The two-year loan, called a ‘Stand-By Arrangement’, offers Iraq a total of $3.7 billion to help ensure macroeconomic stability, advance structural reforms, and temporarily support the budget.

“Iraq has continued to make good progress in rebuilding key economic institutions and maintaining macroeconomic stability, under very difficult circumstances,” IMF deputy managing director, Naoyuki Shinohara, said in the statement.

“The modernization of Iraq’s public financial management system encompasses further improvements in fiscal reporting and the budgetary process, and the adoption of a single treasury account,” he said.

The IMF loan to Iraq follows a loan of $746m in 2005, which was extended in 2007 and replaced by another arrangement that expired in March 2009.

In 2004, the IMF had given “post-conflict” aid to Iraq after it lost a war against the United States and its allies.

The Iraqi economy is slowly recovering from the destruction caused by the international isolation of the regime of Saddam Hussein before the war, by the war itself and the violence that followed.

Shinohara called on the government to step up the pace of fiscal and financial sector structural reforms and noted the government had achieved a surplus budget in the first half of 2010.

“The authorities have made commendable efforts to conclude debt agreements,” he added.

(Sources: AFP, BBC)

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