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IMF hints large loan for Iraq condition removal of fuel subsidies
11/11/15
IMF announced it had agreed with the Iraqi government that the Fund monitors the economic policies as the basis for a possible large financing program in 2016.
The head of the IMF mission to Iraq Christian Gooch in a statement that the two sides agreed on a monitoring program to experts Fund aims to curb spending and reduce the deficit in the budget of Iraq which is expected to close to 12 percent of next year's economic activity. "
Gooch added that the move "will allow the Iraqi authorities built a track record in order to finance a possible deal with the Fund."
He noted that the IMF is expected to gross domestic product of Iraq recorded 1.5 percent growth this year due to increases in oil production and the rising deficit in the current account balance to 7 percent of gross domestic product.
He predicted that "Iraq's foreign exchange reserves -alta amounted to $ 59 billion at the end of the previous month, will fall but will remain at a level sufficient to cover nine months of imports."
It is said that to get a loan from the International Monetary Fund will help Iraq OPEC member to stabilize financial conditions while suffering because of falling oil prices and the costs associated with fighting the terrorist organization Daash.
He informed a senior IMF official said last month that the new loan will be the largest of Iraq "several times" of the emergency funding of $ 1.24 billion, the Fund has agreed to be submitted in July.
And it became the financial pressure on Iraq so heavy that Baghdad suspended a plan to issue international bonds worth two billion dollars last month, because investors were demanding too high a yield.
And any large loan from the IMF for Iraq will come from conditions such as Baghdad steps to cut energy subsidies [include hydrocarbons such as benzene, fuel, etc.] and the reform of state-owned enterprises which steps may be difficult at the political level.
Iraq was represented by the Ministry of Finance has signed Tuesday with the International Monetary Fund memorandum of understanding conducive to monitor the financial and economic policy, for the remainder of fiscal year 2015 and for the year coming in 2016.
He said Finance Minister Hoshyar Zebari told a news conference after the signing, which took place in the Jordanian capital Amman, said the agreement with the Fund "resulted in a loan of $ 1.2 billion Fund for Iraq submitted before the end of this year, except for its impact in improving the classification of Iraq in front of international institutions reduces interest rates semen bonds put on the market.
Zebari denied that "have to agree any consequences for employees and social benefits provided by the government salaries or subsidies are paid to the displaced," declaring that the government will be issued next year, 2016 bonds worth seven trillion dinars to fill the budget deficit -albalg about 22 trillion Danar- will be five of them put on the market local and the rest in the international market. "
For his part, the Chairman of the IMF mission in Iraq Gooch Christian elements of the agreement with Iraq, said the Iraqi authorities and under the [financial and economic policies] surveillance program, which begins with the end of the 2015 correction will be implemented to contain public spending in line with revenues and available financing process.
And the end of the patch Gooch said he aims to cut non-oil first by 4 percent of the total non-oil GDP to the end of the period of 2014-2016 in the framework of the program, which also includes measures to support the public finances and the other to achieve financial stability and the fight against money laundering and terrorist financing.
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