IMF Exe Board Concludes 2015 Article IV Consultation With Iraq
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IMF Exe Board Concludes 2015 Article IV Consultation With Iraq
8/19/2015 IMF Executive Board Concludes 2015 Article IV Consultation with Iraq Press Release No. 15/382 August 18, 2015 On July 29, the Executive Board of the International Monetary Fund (IMF) concluded the 2015 Article IV consultation1 with Iraq. Iraq is facing a double shock arising from the ISIS insurgency and the plunge in global oil prices. In 2014, real GDP contracted by 2.1 percent mainly due to the impact of the conflict, while oil production and exports increased slightly compared to 2013. This year, overall economic activity is expected to see a modest recovery of 0.5 percent thanks to oil sector expansion, while non-oil activity is expected to contract further. ~~~ The decline in oil prices has driven the decline of Iraq’s international reserves (including the Development Fund for Iraq) from $84 billion at end-2013 to $67 billion at end-2014. Fiscal pressures are intensifying, with the government deficit expected to expand from 5.3 percent of GDP last year to 18.4 percent of GDP in 2015 due to continuing weak oil prices and rising humanitarian and security spending. The authorities have appropriately maintained the exchange rate peg. Liberalization steps taken by the Central Bank of Iraq led to a decline in the parallel market spread to less than 2 percent by end-2014. The imposition of new restrictions triggered significant market volatility and a sharply wider spread in the first months of this year, but their recent removal has helped narrow the spread back to 4 percent by July. Medium term growth prospects remain positive, though less favorable than before the crisis. Growth will be driven by the projected ramp-up in oil production and the rebound in non-oil growth supported by the expected improvement in security and implementation of structural reform. Risks remain very high, however, arising primarily from an escalation of the conflict, political tensions, and poor policy implementation. The Fund is supporting Iraq through a disbursement under the Rapid Financing Instrument in the amount of SDR 891.3 million ($1.242 billion), equivalent to 75 percent of quota2. Executive Board Assessment 3 Directors noted the severity of the double shock facing Iraq as a result of the continuing ISIS insurgency and the global oil price decline. ‘ The risks remain very high, emanating from an extension of the conflict, political tensions, weak policy implementation, and further shocks from oil markets. In this context, Directors noted that the steps taken by the authorities are in the right direction, but urged further determined efforts to address the large financing gap and maintain the momentum for reforms. Directors welcomed the 2015 budget as a good step toward addressing pressures from lower oil revenues amid higher humanitarian and security spending, and commended the introduction of new revenue measures. While recognizing that the current adjustment plans may be socially and politically challenging, Directors saw a need for additional measures to help close the large financing gap and build fiscal buffers. Some Directors expressed disappointment over the delay in implementing the electricity tariff reform. In this regard, Directors welcomed the authorities’ commitment to implement the reform as soon as possible or adopt compensatory fiscal measures. They also recommended expenditure rationalization while safeguarding priority social and capital spending and making social safety nets more efficient. Directors urged the authorities to tap domestic markets and seek further external financial support, while avoiding the buildup of domestic and external arrears. Over the medium term, strengthening public financial and debt management will be crucial. Directors noted that indirect central bank financing of the government is necessary at this juncture given the lack of other sources of financing, but stressed that this should not become a recurring source of financing. They, therefore, welcomed the authorities’ intention to firmly limit such support and clarify the terms of the related financial operations between the central bank, the state-owned banks, and the government. Directors supported the authorities’ commitment to maintain the exchange rate peg, which has served as a sound nominal anchor for Iraq. They also welcomed the steps taken to liberalize the foreign exchange market and urged the removal of remaining exchange restrictions and multiple currency practice as external conditions evolve. Directors underscored the risks from rising tensions in the banking system arising from the impact of the crisis on the assets and activity of private banks, and the increasing role of state-owned banks in financing the government. In this regard, they welcomed the steps taken to strengthen banking supervision and the authorities’ commitment to press ahead with the restructuring of Rasheed and Rafidain banks. Directors emphasized the importance of bringing Iraq’s frameworks for combating corruption, money laundering, and terrorism financing in line with international standards and implementing them effectively. Directors welcomed the authorities’ recognition of the need to maintain the momentum on restructuring the economy despite the current difficulties, and emphasized the importance of staying committed to reforms. They highlighted the need to diversify the economy and improve the resilience and inclusiveness of economic growth. They supported the focus on strengthening fiscal institutions, completing the transition to a market economy through further private banking sector development and state-owned enterprise restructuring, and improving the business environment, governance, and the labor market. In this context, they noted the need for Fund technical assistance in strengthening Iraq’s institutions. Recognizing the difficult circumstances, Directors agreed that a realistic implementation timeline is important, while pressing ahead with high-priority reforms. Looking ahead, a forward-looking policy framework could help the adjustment process and allow the authorities to build a track record of strong policy implementation. https://i.servimg.com/u/f18/17/45/42/20/imf110.jpg https://i.servimg.com/u/f18/17/45/42/20/imf210.jpg Sources: Iraqi authorities; and IMF staff estimates and projections. 1/ Does not reflect KRG production during 2013 and 2014. 2/ Reflects KRG exports through State Organization for Marketing Oil (SOMO). 3/ Reflects the balances of the Development Fund of Iraq which were moved from the Federal Reserve Bank of New York to the CBI as a US$ account (US$ balances from oil revenues) in May 2014. 4/ Starting 2014 includes US$ account balances from oil revenues. 5/ Positive means appreciation. 1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. 2 The Executive Board approved the Rapid Financing Instrument for Iraq on July 29, 2015 (see Press Release No. 15/363) 3 At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm http://www.imf.org/external/np/sec/pr/2015/pr15382.htm tlm724: urged the removal of remaining exchange restrictions and multiple currency practice as external conditions evolve |
Re: IMF Exe Board Concludes 2015 Article IV Consultation With Iraq
IMF: the growth rate of the Iraqi economy outlook remains positive despite the current crisis
Author: HAA
Editor: BK, HH
08/19/2015 17:47
Long-Presse / Baghdad
International Monetary Fund forecast on Wednesday to witness the Iraqi economy "improved modestly" during the current 2015 by 0.5 percent due to an increase in oil production, with incidence more contraction in activity the non-oil sector, and with the exception of the rate of growth expectations in the medium term, is still positive, although it is less than the required rates before the crisis, he stressed that the growth will be determined by the desired height and the recovery of oil production growth rates in other sectors as well as the expected improvements to the security situation and the implementation of structural reforms.
This came in a report by the International Monetary Fund IMF, today, on economic growth indicators in Iraq, and the obstacles they face as a result of lower oil prices and the war against al (Daash), and its forecast for growth for future economic, in the wake of the end of Article IV of the current 2015 consultations , conducted by the executive body of the Fund with Iraq, according to published Fund and I followed (range Press).
The IMF said in his report, he said that "Iraq faces a double acute crisis arising from the organization Daash and falling world oil prices threats", adding that "the GDP growth rate of GDP in the past in 2014, shrank by 2.1 percent due to the impact of the ongoing conflict in the country, despite the increase few in oil production and exports in 2013 as compared to the past. "
Fund predicted that "undergone a modest improvement on the overall Iraqi economic activity for the current year 2015 by 0.5 percent as a result of the expansion in the oil sector", but he expected in return, "a contraction in activity over the non-oil sector."
Fund saw, that "the fall in oil prices ed to the decline in Iraq's reserves of hard currency, including the Iraqi Development Fund allocations, from $ 84 billion at year-end 2013, to $ 67 billion at the end of 2014," noting that "financial pressures continuing escalate expected expansion in the government budget deficit from 5.3 percent last year, who scored with, to 18.4 percent during the current year, to the continued decline in oil prices, and rising spending to cover the humanitarian and security needs. "
He said the International Monetary Fund, that "the rate of growth expectations in the medium term, is still positive, although it is less than the required rates before the crisis," noting that "growth will be determined by the desired rise in oil production and recovery rates of growth in the non-oil sector, which will be supported by the expected improvement in the situation security and implementation of structural reforms ".
Fund promised, that "the risk is still very high," attributing it to "the escalation of fighting and political tensions and the weakness of the executive policy."
He concluded advisers executives in the fund, that "the steps taken by the government authorities in Iraq are going in the right direction", but they "asked for more tireless efforts to address the significant financial gap and maintain the sustainability of the momentum of reforms efforts."
Fund recommended, the need to "make a rationalization in spending while maintaining a secure level on the priorities for the social aspect and the important things basis, and to achieve adequate level of social security."
Within the economic growth indicators in Iraq, predicted the International Monetary Fund, that "GDP growth rate up to 7.6 percent during the next year in 2016, and rise to 8.1 percent during the year 2017 the next," while predicted that "rising oil production rates from 3.4 million barrels per day during the current year 2015, to 3.8 million b / d by 2016, and that up to 4.3 million b / d by 2017 ".
The Fund also predicted that "the Iraqi source oil prices rise from $ 54.7 per barrel during the current 2015 to $ 62.0 during the year 2016 to $ 67.1 during the year 2017", and that "continues to climb to $ 69.9 a barrel in 2018".
The oil prices more than 60 percent down compared to the summer of 2014 the past, having reached nearly US $ 120 a barrel, fell to the range of $ fifty now, in conjunction with the takeover (Daash) on more than one third of the country after (the tenth of June 2014) .
http://www.almadapress.com/ar/news/54176/صندوق-النقد-توقعات-معدل-نمو-الاقتصا
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