IMF Approves $5.3bn Stand-By Arrangement for Iraq

Implementing fiscal consolidation while protecting the poor. The government will continue to implement fiscal consolidation, mostly through inefficient capital expenditure retrenchment, while protecting social spending. This will help to bring spending to a sustainable level given the much lower level of oil revenue.

The government will also design and implement deeper grounded revenue and expenditure reforms to hold the lid on the non-oil primary balance and achieve debt sustainability. Efforts are underway to implement the budget-sharing agreement with the Kurdistan Regional Government.

Strengthening public financial management and curbing corruption. To improve fiscal discipline and the quality of spending, the Ministry of Finance will strengthen public financial management legislation, report fiscal tables in compliance with international standards, enhance commitment controls and cash management, conduct regular surveys and audits to monitor and curb arrears, reform public investment management, and improve debt management with the help of technical assistance.

Monitor financial risks to preserve financial sector stability. Important steps are being taken to strengthen the legal framework of the Central Bank of Iraq following on the Fund’s recent safeguards assessment, as well as to restructure state-owned banks and strengthen prudential standards and bank supervision with the support of external consultants. Additionally, measures will need to be implemented to prevent money-laundering, counter the financing of terrorism, and strengthen the anti-corruption legislation to help improve the integration of Iraq’s financial system into the global economy.

Additional Background

Iraq became a member of the IMF on December 27, 1945 and has an IMF quota of SDR 1,663.80 million (about US$2.32 billion).

For additional background on the IMF and Iraq see:

http://www.imf.org/external/country/irq/

(Source: IMF)

(IMF image via Shutterstock)