***** IMF: positive economic developments and economic growth acceleration witnessed Iraqi

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***** IMF: positive economic developments and economic growth acceleration witnessed Iraqi

Post  Admin on Fri Dec 20, 2013 6:30 am


 Baghdad / Bassam Abdul-Razzaq al-Zahra and Hamid

A report prepared by experts at the International Monetary Fund Article IV Consultation with Iraq in 2013, which took place in the first quarter of the year 2013 in Amman, Jordan, that "in spite of the circumstance of the Iraqi difficult, the economic developments generally positive and has seen economic growth acceleration, At the same time the report did not hide the risks resulting from the decline in the level of political and security situations.

She (range) a chart he submitted the Resident Representative of the International Monetary Fund for Iraq, Ghazi reticles showing the latest economic developments and prospects in the medium term in addition to the risks and economic reforms.

Shows reticles that inflation remained within the confines of the box one of 6% at the end of 2011 to 3.6% at the end of last year, which is mostly due to lower prices of imported food, but it is expected to be slightly more than at other times of 2013. (See scheme 1)

The reticles that he "has increased international reserves at the Central Bank and to the Development Fund for Iraq of $ 61 billion at the end of 2011 to 70 billion dollars at the end of 2012 (more than nine months of imports, equivalent to 33% of GDP) due to higher exports oil, also increased reserves of public finance at the Development Fund for Iraq, from 16.5 billion dollars to 18 billion dollars (six months of salaries and pensions, the equivalent of 8.5% of GDP).

Iraq is a country rich in oil
The report shows that "Iraq's oil reserves are installed, which amounted to about 143 billion barrels, are among the highest in the world, and are the costs of oil extraction as very low. Contributed to the increase in production since 2003, the high per-capita GDP of $ 1,300 in 2004 to 6300 dollars in 2012. increases gross domestic product in a series of new data significantly (from 114 billion dollars to 180 billion dollars in 2012).

Economy depends

Large oil
The report confirms that "the government and state-owned enterprises employ half the workforce almost. Also depend majority of the population in income on government employment or financial transfers from the state. Additionally, sees the population that the public sector is the main vehicle for the distribution of oil wealth. While contributing to higher employment government and high wages in social stability, improvements in the delivery of public services are still scarce. " (Scheme 5)

In the opinion of Iraqi economists that "at present, accounts for workers state with most spending of oil resources and there disguised unemployment huge state apparatus is the other source of waste, corruption and the privileges of financial and in-kind and pension without work for by many people there. Canada with the three million square kilometers and a population equivalent Iraq was run by about 650 000 employees in 2006 and with high efficiency compared to three million employees (except military and police) in Iraq to about 450 square kilometers and efficiently degraded. "

Iraq are vulnerable

Critical risk reduction

In oil prices
In the opinion of reticles in the framework of an oil price of an investigator for a draw of $ 102 a barrel in 2012, and is among the highest prices in the region, Iraq is severely vulnerable to the risk of decline in oil prices. At the same time, the high level of current spending makes it difficult to adapt to external shocks without reducing investment spending disproportionately, as happened during the global financial crisis in 2008-2009. In addition, the budget is the main channel through which transmitted the effects of fluctuations in the oil market to the local economy.

Foreign direct investment is low, which is due mainly to the weakness of the business environment and governance

The report finds that "the business environment are suffering from extreme weakness, and languishing Iraq at the lowest list ranking the world for ease of doing business as a result of weak governance, and the inefficiency of the judicial system, and the lack of consistency of regulations, and inadequate security. Less foreign direct investment, especially in the informal sector oil, for its counterpart in other countries in the oil-exporting region. (scheme 6)
The total banking assets in Iraq at a rate of 77% of GDP, compared with an 130% in the Middle East and North Africa, with a total credit about 29% of GDP, compared with 55% in the region. However, the numbers college credit largely reflect loans and trade credit granted by the state-owned banks to state-owned enterprises. Accordingly, the estimated credit to the private sector by about only 15% of GDP.

The report is likely to remain macroeconomic prospects in Iraq driven by developments in the oil sector, while foreign reserves continue to rise, and will result in oil export revenues to the strong increase in commodity prices and the rise in non-commercial real exchange rate. It will range from domestic inflation rate between 5% and 6%, a level higher than its counterpart in the trade partners.

Weak implementation of policy
Decline in the level of the political situation and the security situation
Delay in increasing the volume of oil production (the delay in the development of oil fields and energies of the export of oil in Iraq)
Decline in oil prices

The role of policy: fiscal policy and financial reform

Accumulate financial margins and preventive.

Rationalization of current spending (subsidies, wages, transfers, in-kind support for the food basket).

Institutional structure of public finances (the accounting system, the Financial Administration Act, the Treasury account, the integrated system for financial management information).

The role of policies: monetary policy and financial sector

The existence of a stable exchange rate and to create the conditions for greater flexibility in the exchange rate.

Liberalization of the foreign currency market, simplifying the instructions of foreign currency and strengthen the system of anti-money laundering and terrorist financing.

Prudent management of the Central Bank reserves of foreign currency and the Development Fund for Iraq.

Restructuring of public banks and support the growth of private banks through the establishment of fair competition with public banks.

The role of policies: structural reforms and private sector development
The energy sector (a law on hydrocarbons sector, there is a need to invest in the production of electricity, the abolition of fuel subsidies granted to producers).

State-owned enterprises. Restructuring of institutions and governance reform and capitalized institutions that can be repaired and the closure of non-viable ones.

Improving the business environment.
The agriculture sector (reform the public distribution system, which contributed to the decline in domestic production).

Oil will continue to dominate the Iraqi economy.
Will be the management of oil revenues in a good way is crucial.
The budget should be isolated economy from the volatility of oil prices.
Should spend public finances to be strong to stand up to the fall in oil prices.
Can be a stable exchange rate, if it were free of distortions.
Implementation of policies and political matters are key risk factors.



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