Press Release No. 10/373
FOR IMMEDIATE RELEASE
October 1, 2010
IMF Executive Board Completes First Review Under Stand-By Arrangement with Iraq,
Grants Waivers and Approves US$741 Million Disbursement
The Executive Board of the International Monetary Fund (IMF) today completed the first
review of Iraq’s economic performance under a program supported by a 24-month Stand-By
Arrangement (SBA). Completion of the first review makes an additional SDR 475.36 million
(about US$ 741 million) available for disbursement, bringing the total resources that are
currently available to Iraq under the arrangement to SDR 772.46 million (about US$ 1,204
billion).
The Executive Board also approved a waiver for nonobservance for the end-June
performance criterion on the net international reserves and a waiver of applicability for the
end-June performance criterion on the central government current spending bill for which
data is not yet available. A rephasing of the remaining disbursements was also approved by
the Board.
The SBA was approved on February 24, 2010 (see Press Release No. 10/60) for SDR 2.38
billion (about US$3.7 billion). In addition to providing temporary budget support, the SBA
supported program aims to ensure macroeconomic stability and provide a framework for
advancing structural reforms in Iraq.
Following the Executive Board’s discussion on Iraq, Mr. Naoyuki Shinohara, Deputy
Managing Director and Acting Chair, stated:
“Iraq has continued to make good progress in rebuilding key economic institutions and
maintaining macroeconomic stability, under very difficult circumstances. The Fundsupported
program has provided a valuable anchor for economic policy during a period of
high vulnerability. In the first half of 2010, oil revenues remained strong, inflation continued
to be subdued, and the budget recorded a surplus. For 2010 as a whole and 2011, based on
International Monetary Fund
Washington, D.C. 20431 USA
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conservative assumptions for oil prices and export volumes, Iraq’s external and fiscal
positions are expected to remain in deficit but return to a surplus in 2012.
“The 2011 budget will need to be consistent with the goal of achieving medium-term fiscal
sustainability and be based on conservative assumptions for oil prices and volumes.
Containing current spending would allow further increases in investment, and a stronger
emphasis on improving the quality of spending and rebuilding public infrastructure will help
achieve higher economic growth.
“Success in reconstructing the economy will depend on accelerating the pace of
implementation of the government’s fiscal and financial sector structural reform agendas.
The modernization of Iraq’s public financial management system encompasses further
improvements in fiscal reporting and the budgetary process, and the adoption of a single
treasury account. Further progress in strengthening the Central Bank of Iraq’s supervisory
role and moving ahead with the financial and operational restructuring of the two largest
state-owned banks will help in increasing financial intermediation. As a candidate member of
the EITI, the Iraqi authorities intend to continue making progress in strengthening
governance and transparency in the hydrocarbon sector.
“The authorities have made commendable efforts to conclude debt agreements. Further
progress in resolving outstanding claims under terms comparable to the 2004 Paris Club
Agreement will be important.”
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