IMF: 9 percent growth rate of the Iraqi economy this year

07/24/2013 12:00 AM

In an annual report issued after meetings with specialists
BAGHDAD - Hussein ثغب of Tamimi

 International Monetary Fund predicted that achieves Iraq during the current year economic growth of 9 percent after a rise in the volume of oil exports.

These expectations came in a report recently issued by the Fund and ensure positive signals in more than one paragraph to the Iraqi economy is witnessing a twist.

The report was issued after the consultative meetings held between representatives of the Fund and the Iraqi side in March of this year

In an interview, the "morning" with the head of the IMF mission to Iraq Carlo Sidr Allweg on highlights of the report in regards to Iraq, he said: The work was done primarily through the programs of the International Monetary Fund (IMF) official, which also included financial and technical assistance.

It has provided those programs framework to help the Iraqi government and the Iraqi Central Bank on the application of sound policies, especially public finances of the state, and to contain inflation, and maintain a fixed price for the Iraqi dinar exchange (strong and stable) and the restructuring of external debt Iraqi successfully.

The report of the fourth article is a way for regular periodic oversight exercised by the International Monetary Fund (IMF) on each of its members.

These controls are a relatively new type of relationship between the IMF and Iraq; because we - the IMF - we were and still working with Iraq since 2004.

Addressing the challenges facing Iraq

He said Allweg: The report issued by the major recommendations emphasize the importance to take policy-makers Iraqis stand initiatives further towards addressing many of the challenges facing Iraq, in order to realize the potential of Iraq's enormous economic entirety, and dissemination of the benefits of economic growth to the general population.

 Adding that the report contains mentioned on five policy recommendations, will lay, from the standpoint of the International Monetary Fund (IMF), the foundations for achieving higher economic growth and lower rates of poverty over the next few years.

 He stressed that the recommendations are:

Sustainable budgets

First, the government should focus on developing sustainable budgets can finance public spending of the proceeds of oil revenues.

But because government spending is the main channel of the shocks coming from the international oil market, the construction of public financial reserves, which can fortify the spending of declines in oil exports or in the price of oil, is crucial as well.

 The government actually owns these reserves in the Development Fund for Iraq (a type of bank accounts that spared to meet the need in the future), but the government should also increase the value of those reserves.

Raise the quality of spending

And that is also important to contain the growth in public spending to avoid large gaps in the budget in the future, in addition to reducing waste in spending as well.

 We appreciate the special role played by the public sector in Iraq, but we still see room for continuing to play this role, for example, by reducing the growth of employment / employment in the public sector, and reduce subsidies to the electric power sector, and reform of the public distribution system, owned and state-owned companies to the state.

In addition to the construction of public financial reserves, Iraq can use the savings to upgrade the quality of qualitative social spending and public investment in infrastructure.

Liberalization of the foreign exchange market

The second recommendation, it had to be on the central bank to accelerate the pace of liberalization of the foreign exchange market, knowing that he had already started so recently.

 He served the exchange rate stable Iraq is well over the past few years, thus providing a nominal pillar of the economy, and helping to maintain a low level of inflation in an environment beset by doubts.

But the Iraqi Central Bank had introduced a number of restrictive regulations intense in the last two years in response to concerns that Sawrth on money laundering and foreign exchange flows of illegal out of Iraq.

 In our view, these regulations quoted a great deal of legitimate demand for foreign currencies to the parallel market, and as a result, has risen a price difference between the official and parallel exchange, reaching 8 percent in the month of April.

Support the value of the Iraqi dinar

Explaining that the third recommendation drawn to the importance of continuing to exercise prudent management of Iraq's foreign currency reserves held by the Central Bank of Iraq and the Development Fund for Iraq.

The IMF supports strongly the independence of the Central Bank of Iraq, and the need for the Bank to manage international reserves without political interference in order to support the value of the Iraqi dinar.

 We also believe that it is also important to maintain the current separation between the process of international reserves which are managed automatically from the central bank alone, and between the public financial reserves, which are controlled by the government, and in the Development Fund for Iraq.

 And must continue to wisely invest these reserves in liquid assets to a large extent.

We appreciate the progress made by Iraq

He noted that the International Monetary Fund (IMF) urged Iraq to make progress in financial sector reform.

He said that we appreciate what Iraq's progress in improving process control and restructuring of banks Rasheed and Rafidain bank.


 But the financial system in Iraq is still too late to grow more dangerous, in the presence of levels of deposit, credit, much lower than the averages of the deposit and credit in the Middle East and North Africa.

 The final recommendation came out a little bit about our basic framework, but is gaining critical to economic growth in Iraq. We see a critical need for structural reforms to promote private sector growth and job creation.

Support Iraq

The latest program from among those programs was "a standby credit agreement", which was adopted to approve in the year 2010, and expired in February 2013.

 Therefore, we are moving at the present time to establish a relationship independent of free and equal between Iraq and the International Monetary Fund, but we still hope that you can this relationship to help Iraq, and we stand ready, of course, to return to a level of cooperation together more intense, if they want government Iraq; Our ultimate goal is to support the Iraqi people, and will provide this support in the best way we can use.

And evaluation of the Fund for the latest performance record of the Iraqi economy, and what are the prospects for this economy?

Said Allweg was still recent developments for the growth of the entire positive macroeconomic widely, and the credit for this is due, in a great degree of it, to the high volume of oil exports.

It surpassed the economic growth rate of 8 percent in 2012, and is likely to rise to 9 percent in 2013 when oil production rises to the level of 3.3 million barrels per day.

As well as the inflation rate fell from 6 percent at year-end 2011 to 3.6 percent at the end of last year, and should rise only a slight rise to about 5 percent in 2013.

 Also, the external situation of Iraq is also strong. Stressing that the international reserves of the Central Bank of Iraq has risen from $ 61 billion at year-end 2011 to $ 70 billion at year-end 2012.

The fiscal reserves to the Development Fund for Iraq has risen is the other (16.5) billion U.S. dollars to 18 billion U.S. dollars.


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