KARACHI: An International Monetary Fund (IMF) mission led by Christian Josz visited Amman from November 1-10, 2015 to discuss a Staff-Monitored Program (SMP) with the Iraqi authorities.
At the end of the visit, Mr. Josz issued the following statement:
“Iraq continues to face a number of challenges. Key among those is the ongoing armed conflict with ISIS, which continues to strain the country’s resources and results in new waves of internally displaced people, reaching over 4 million in June 2015. The other key challenge is the fall in oil prices, causing a large external shock to the balance of payments and the budget revenue, which depends predominantly on oil export receipts.
“In that difficult environment, real GDP should grow by 1.5 percent in 2015 owing to the increase in oil production, which is located in areas under control of the Iraqi government and the Kurdistan Regional Government. The current account deficit of the balance of payments should increase to 7 percent of GDP in 2015, and the foreign exchange reserves, which amounted to US$59 billion at end-October 2015, should decline but still amount to 9 months of imports of goods and services at the end of 2015.”
According to the statement, the Iraqi authorities are committed to addressing the fiscal pressures caused by the dual shocks related to oil prices and the ISIS attack. They have reached a staff-level agreement with the mission on an SMP starting at the end of 2015. Under the SMP, the authorities will implement a fiscal consolidation that will contain public expenditure in line with available revenue and financing, and aim to reduce the non-oil primary deficit by 4 percent of non-oil GDP between 2014 and 2016. Under the SMP, agreement has also been reached on measures to strengthen public financial management, anti-money laundering and countering the financing of terrorism (AML/CFT), and financial sector stability.
The SMP will be submitted to IMF management for its consideration by the beginning of next year. It will allow the Iraqi authorities to build a track record for a possible Fund financing arrangement.
“During the mission the team met with Minister of Finance Hoshyar Zebari, Acting Governor of the Central Bank of Iraq (CBI) Ali Allaq and officials from the ministries of finance, planning, oil, the CBI, the Board of Supreme Audit and representatives from state-owned banks. The team would like to thank the Iraqi authorities for their cooperation and the open and productive discussions.”