An IMF programme may help Iraq access international bond markets and cut the government’s borrowing costs at a time when Opec’s second-biggest oil producer is engulfed in a conflict with Islamic State militants. A 50% plunge in crude prices over the past year have compounded the crisis. The country will run a current-account deficit equal to 8% of economic output this year and a budget gap of 17%, according to IMF estimates.
Mudher Saleh said the government’s economic plans may go a long way in satisfying measures that would be required under an IMF loan accord. Finance Minister Hoshyar Zebari couldn’t be immediately reached for comment.
“Some IMF programmes adopt Prime Minister Haidar Al-Abadi’s reforms and consider them enough,”
Saleh said. Government reform efforts are “in harmony with what the IMF typically seeks,” he said.
Abadi announced a plan to tackle graft, sectarianism and political patronage in August after public protests and an endorsement from the country’s most senior Shia cleric, Grand Ayatollah Ali al-Sistani. The government is also cutting spending and this year’s budget deficit will likely be lower than the 25.4tn dinars (20.9bn) originally planned, central bank Governor Ali Mohsen Ismail said in an interview this month.
“We expect fiscal and external financing needs to remain high next year and for Iraq to be unable to meet them via heavy reliance on private creditors,”
“That would necessitate a much larger IMF programme”
and more spending cuts, he said.