Tag Archive | "IMF"

GDP to Shrink this year, then Recover

By John Lee.

A new report from the International Monetary Fund (IMF) has forecast that the Iraqi economy will contract this year due to continuing war against the Islamic State.

In its October World Economic Outlook, it says that Iraq’s gross domestic product (GDP) is expected to shrink by 2.66 percent this year, down from the 5.9 percent growth it forecast in April. The fighting has prevented Baghdad from exporting oil to Turkey via pipeline and to Jordan by road.

The report goes on to predict growth rates of over the coming five years (2015-2019) of 1.455 percent, 7.617 percent, 6.693 percent, 7.712 percent, and 9.140 percent respectively, giving an average growth rate of 6.5 percent over the period.

Next year’s growth of just under 1.5 percent is down from the 6.7 percent growth projected in April.

(Source: IMF, Gulf Daily News)

(GDP image via Shutterstock)

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Iraq Cuts Gold Holdings by a Quarter

By John Lee.

Reuters reports that Iraq cut its gold holdings by a quarter in November.

Data from the International Monetary Fund (IMF) showed that the country’s stocks fell to 29.9 tonnes.

(Source: Reuters)

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Iraq Boosts Gold Reserves

By John Lee.

Iraq made its first major move in years to boost its gold reserves, joining central banks from emerging market economies such as Brazil and Russia in diversifying its foreign reserves.

According to a report from the Lebanese Daily Star, central bank purchases have been one of the biggest drivers of gold’s rally since 2010 – a year which saw central banks turning net buyers of the precious metal for the first time in two decades amid growing doubts about the stability of the dollar as the world’s top reserve currency.

Over the course of three months between August and October this year, Iraq’s gold holdings quadrupled to 31.07 tonnes, the International Monetary Fund‘s monthly statistics report showed on Thursday.

(Source: Lebanese Daily Star)

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IMF Approves 7-Mth Extension of Stand-By Arrangement

By John Lee.

The Executive Board of the International Monetary Fund (IMF) has approved a seven-month extension of Iraq’s Stand-By Arrangement (SBA), to February 23, 2013.

The SBA had been scheduled to expire on July 23, 2012. The extension, which had been requested by the Iraqi authorities, will provide them with time to implement the policy measures needed to complete the combined third and fourth reviews under the SBA.

The extension will, in particular, provide time for discussions on fiscal policies for the remainder of 2012 and on measures to improve the functioning of the exchange regime.

The two-year Stand-By Arrangement (SBA) in the amount of SDR 2.38 billion (about US$3.58 billion), was approved by the IMF’s Executive Board on February 24, 2010 (see press release 10/60). The IMF’s Executive Board completed the first program review on October 1, 2010 (see press release 10/373), and the second review on March 18, 2011 (see press release 11/90).

At the time of the second review, the program duration was extended by five months to July 2012, along with a rephasing of program disbursements based on a shift in financing needs. Total resources currently available to Iraq under the arrangement amount to the equivalent of SDR 1307.24 million (about $1.96 billion).

(Source: IMF)

(Picture: Christine Lagarde, Managing Director, IMF)

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IMF Forecasts Accelerating Growth for Iraqi Economy

The International Monetary Fund (IMF), in its latest World Economic Outlook, makes the following forecasts for Iraq:

The report sees strong growth continuing, with a figure of 8.8% projected for 2017.

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Statement by IMF Managing Director Christine Lagarde on Iraq

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement after a meeting with H.E. Nouri Al-Maliki, Prime Minister of Iraq in Washington on Tuesday:

It was a pleasure to meet Prime Minister Al-Maliki today. Over the past several years, Iraq and the International Monetary Fund have engaged in a very successful partnership, anchored by successive IMF-supported economic programs. This partnership has facilitated substantial debt relief and helped achieve macroeconomic stability, including a strong dinar, low inflation, and a resumption of economic growth, in a very challenging political and security environment.

Prudent fiscal policies are essential to maintaining macroeconomic stability and fostering inclusive growth. In this context, I am very encouraged by the government’s new budget proposal for 2012 that was recently submitted to the Iraqi Council of Representatives. The proposal aims to restrain the growth of current spending, thus freeing up resources for infrastructure investment and social support, while limiting the size of the budget deficit. The proposed budget would allow the current Stand-By Arrangement (SBA) to continue to provide a safety net to the budget in case oil revenues were to fall sharply.

Promoting policies that lead to more inclusive growth is central to our engagement with Iraq. We are working closely with the Iraqi government to rebuild its essential economic institutions to help improve economic management and public service delivery. The current SBA offers a framework for Iraq’s structural reform agenda, by promoting better public financial management, including the management of Iraq’s hydrocarbon resources, and developing a financial sector that can support private sector activity and job creation. We look forward to further progress in these areas.

We remain committed to helping Iraq in its efforts to foster sustained and inclusive economic growth, generate viable employment opportunities, and improve living standards for all Iraqis. An IMF staff mission is scheduled to meet the authorities in January to discuss progress under the program and next steps.

(Source: IMF)

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IMF to Fund Baghdad-Turkey Highway

The Ministry of Construction and Housing is to build a highway linking Baghdad with Turkey, according to a report from Azzaman.

The 508 km road is to be financed by the International Monetary Fund (IMF).

“This project is a challenge to the ministry since it assumes great economic significance for the country,” the ministry quoted minister Mohammed Saheb as saying.

In the 1980s Iraq built a road nearly 1,000 km long linking its southern port of Basra with both Jordan and Syria. The highway to Turkey was planned but it was shelved due to the ruinous 1980-1988 war with Iran.

Once completed, Iraq will have one of the most extensive and modern highways in the Middle East, linking its southern ports and major cities with neighbouring states.

(Source: Azzaman)

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Iraqi Banks Struggle with Limited Services and Capital

Reuters reports that it’s a tough road ahead for Iraqi private banks required to raise their capital to boost business as they battle against decades of state dominance to win a slice of the asset base from government-run enterprises.

It blames a poor credit culture, the lack of a modern banking system, and the dominance of state banks, for slowing development in the financial sector.

Many Iraqis remain do not have bank accounts, and there are concerns that most business in the country is done through direct cash dealings, which have security implications.

Economist Salam Smeism commented:

We still have the remains of a central management which is still forcing government offices and ministries to deal with government banks exclusively, and consequently all the deposits are going into state banks.

“Where is the benefit in having the money go from the government to the government? We need to develop the private sector.”

Executive director of the Iraqi Private Banks League, Abdul-Aziz Hassoun, said Iraq nationalised its private banks in 1964, paving the way for dominance of the financial industry by the country’s state banks.

After the U.N. imposed economic sanctions in 1991, private banking once again opened up in Iraq. The OPEC country has seven state-owned banks, 23 private banks and eight Islamic private banks, according to the central bank website.

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