The International Monetary Fund (IMF) says it plans to provide Iraq with an emergency financial assistance of $833 million.
The IMF has announced in a statement that the emergency loan will be meant to help Iraq with its war on ISIL terrorists as well as the effects of the low oil prices. It has further added that its Executive Board will meet to approve the initiative in July.
“The Fund is ready to assist Iraq in its efforts to tackle the economic impact of the conflict with ISIL and the decline in global oil prices,” the IMF said in its statement.
It further emphasized that the Iraqi economy contracted 2.1% in 2014 “mainly because of the violence”, and might grow only 0.5% this year. Also, weak oil revenues, the Fund added in its statement, are expected to increase Iraq’s budget deficit and decrease its foreign assets.
“We welcome the steps taken by the authorities to address these urgent challenges and support their request for IMF emergency assistance.
Iraq’s 2015 budget called for roughly $102 billion in spending, to be financed by $67 billion in oil revenues, $13 billions in customs and other tax revenues, and $22 billions in debt.
However, the IMF has warned in its statement that Iraq’s budget deficit is serious.
“Mainly because of the violence, the economy has contracted by 2.1 percent in 2014 and is projected to achieve only a modest recovery of 0.5 percent this year, despite solid growth in the oil sector,” the Fund said in its statement that was released on Friday.
“With low oil prices, export revenues have contracted, pushing the current account into a deficit expected to reach 8 percent of GDP in 2015. As a result, foreign assets have declined in 2014 to US$67 billion and are projected to fall further this year”.
deficit expected to reach 8 percent of GDP in 2015. As a result, foreign assets have declined in 2014 to US$67 billion and are projected to fall further this year”.