Iraq’s economy buckles under the surging costs of fighting Islamic State militants and the plunge in global oil prices

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.

Raza Agha, chief Middle East economist at VTB Capital, said in a note on September 27 that Iraq’s fiscal financing needs may exceed 20% of gross domestic product this year.

“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,”

he said.

“That would necessitate a much larger IMF programme”

and more spending cuts, he said.

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English: current account balance as percent GD...

Current account balance as percent GDP from IMF WEO October 2010 data Quartiles: −48.27% to −9.3125% −9.3125% to −3.59% −3.59% to 1.6125% 1.6125% to 223.79% (Photo credit: Wikipedia)

About Marcus Ampe

Retired dancer, choreographer, choreologist Founder of the Dance impresario office and archive: Danscontact-Dansarchief plus the Association for Bible scholars, the Lifestyle magazines "Stepping Toes" and "From Guestwriters" and creator of the site "Messiah for all". - Gepensioneerd danser, choreograaf, choreoloog. Stichter van Danscontact-Dansarchief plus van de Vereniging voor Bijbelvorsers, de Lifestyle magazines "Stepping Toes" en "From Guestwriters" en maker van de site "Messiah for all".
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One Response to Iraq’s economy buckles under the surging costs of fighting Islamic State militants and the plunge in global oil prices

  1. Pingback: Ron Paul blames Neocons | Marcus Ampe's Space

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