*********** IMF recommends structural reforms

1/4/2015 0:00

During the follow-up to the reality of the Iraqi economy
BAGHDAD - Hussein al-Tamimi Tgb

Eased the International Monetary Fund from the effects of lower oil prices and the war with (Daash) terrorist on the Iraqi economy, despite the burden that Achklana and went towards the fund forecast growth in gross domestic product by 2 percent.

Head of the IMF mission to Iraq, said Carlo Sdrallweg (morning) that the relationship with Iraq has moved from the financial support to control since February 2013.

On a broader scale, the fund has in the last ten years in the role of head of institution-building and counseling to maintain economic stability in Iraq.

 During this period, the focus of policy dialogue, conducted with the Ministry of Finance and the Central Bank of Iraq on fiscal policy, administration and management of oil revenues, and management of foreign exchange reserves, and the fight against money laundering and terrorist financing.

He is currently working on the information we have collected during recent meetings to address, and we will develop a set of recommendations on economic policy within the report of the Article IV consultation for 2015 - a regulatory process that we do every year, who are planning to set up in the spring after further consultations with the government and central bank.

Pointing out that it is essential that the authorities adopt a realistic budget for 2015.

This means that the budget should be based on conservative assumptions of oil revenues, should also be compatible with the spending commitments and revenue of available funding.

As is the case with all of the Petroleum Exporting Countries, is the drop in oil prices the biggest current problem for Iraq, which is likely to reduce the total revenue has imposed tough choices on government spending.

He continued to consider beyond the current crisis, the government should work in the medium term to reduce its dependence on oil by diversifying the economy, and to achieve this goal, the structural reforms will be necessary to remove the obstacles and administrative obstacles to the existence of a competitive private sector and the financial sector is strong.


As for the assistance provided by currently Fund for Iraq regarding the budget of 2015, which he said did not directly participate in the preparation of the budget in 2015, but recent meetings we held with Minister Zebari and team experts gave us the opportunity to discuss the most important issues relating to the formulation of the draft budget that addresses the challenges posed by the spending pressures emergency and falling oil prices.

And the Fund for the Iraqi economy evaluated in the light of recent developments, said: that attacks on Iraq's tragic, and it is facing grave social and humanitarian costs, where the number of internally displaced more than two million people are all in dire need of access to basic services.

As for the economic impact, it is difficult to configure accurate idea now because of the limited economic data for the second half of the year, particularly from the provinces within the areas of conflict.

However, Our initial assessment indicates that "Daash" attacks causing serious harm to the non-oil economy.

 Non-oil growth was already weak before the start of the conflict in the first two quarters of the year, but we thought it would increase a deterioration in the rest of the year because of the movement of trade disruption, and destruction of infrastructure in the four conflict-affected provinces, and the refugee crisis and the decline in business confidence in general.

In addition, lower oil revenues and government spending to weaken the non-oil economy leads.


And that on the contrary, much of the oil sector has not been affected by the conflict, due to focus most of the oil infrastructure in the south of the country and beyond the control of the "Daash." In fact, the performance of the oil production and exports are still well so far and we expect that oil production up to 3.3 million barrels per day, up from 3.1 million barrels per day in 2013, while exports remain at the levels recorded in 2013, which amounted to 2.5 million barrels per day.

He noted that given the combination of these factors, we expect the economic recovery in 2015 with GDP growth rate of more than 2 percent, driven by increased expansion in the oil sector, where the ongoing conflict and weak oil prices remain constitute burden on the economy.

 Inflation remains low, even now at a rate of 0.9 percent at the end of last October, but the provinces affected by the conflict do not enter data derived from the consumer price index inflation figures as contained in the official reports.


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