By Omar Sattarfor Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.
What's the status of IMF loan as Iraq dismisses finance minister?
Prior to his dismissal Sept. 21, Iraqi Finance Minister Hoshyar Zebari ran successful negotiations with international banks to obtain financial support for Iraq.
His last achievement was a $3 billion loan from the International Monetary Fund (IMF) that was secured during negotiations on Sept. 9.
These second round of negotiations between the Iraqi government and the IMF took place in the Jordanian capital Amman. The loan addresses the huge deficit in the 2016-17 fiscal budget due to lower oil prices; however, mystery still surrounds the amount of money that Iraq will have to pay in interest and the conditions imposed by the IMF on the Iraqi government.
Iraq originally began negotiations with the IMF during a first round of negotiations on May 14. With the objective of receiving $16 billion in installments over a three-year period, Iraq secured $5.4 billion.
The World Bank delegation participating in the meetings provided an economic development funding vision for Iraq that consisted of a soft loan of about $3 billion to be paid in installments and settled over a long period of time at a very low interest rate.
Mazhar Mohammed Saleh, the economic adviser to the Iraqi government, told Al-Monitor, “The World Bank said that the loan aims to support the federal budget in line with the economic reform paths and the document of reform launched by the prime minister.”
However, the government still has reservations in regard to the loan interests and the conditions of the World Bank at a time when the stated details seem inaccurate, economist Abdul-Rahman al-Mashhadani told Al-Monitor.
He said, “According to the IMF laws on loans, the initial interests of any loan range between 1.4% to 2.6% and fluctuate between 6% and 10% in the second and third installments. As far as the conditions are concerned, they vary depending on the state of the creditor.”