2023-12-19T17:53:38+00:00
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The International Monetary Fund, after concluding talks with an Iraqi delegation in the Jordanian capital, Amman, expressed its continued support for the Iraqi authorities regarding reform, indicating that Iraq is making progress in the growth of non-oil GDP, but the continued closure of the Iraqi-Turkish pipeline will affect Negatively, at a time when the inflation rate declined under the policies of the Central Bank, the raising of the value of the dinar, and the improvement of measures to combat money laundering and terrorist financing.
The IMF stated in a statement on its website, translated by Agency, that a team of its experts, led by Jean-Guillaume Poulin, met with representatives of the Iraqi authorities in Amman, during the period 12-17 of this December, with the aim of discussing the latest developments, developments, and prospects. In addition to discussing plans related to policies in the coming period.
On the occasion of the conclusion of the talks, Bolan announced that he expects the non-oil GDP to grow by 5% in 2023 in light of the significant expansion in public finances within the framework of the three-year budget law in force.
The report quoted Polan as saying, “Continuing implementation of the budget should help maintain strong non-oil growth in 2024, but the decline in oil production after the closure of the oil pipeline linking Iraq and Turkey, and the reduction in production at the request of the OPEC+ group.” “They will work together to reduce GDP growth in 2023 and 2024.”
He added, “The inflation rate has declined from its peak by 7% in January of this year, and inflation is expected to stabilize in the coming months, thanks to the Central Bank of Iraq adopting a more stringent monetary policy, and the impact of raising the Iraqi dinar exchange rate, Global food prices will decline, trade finance operations will return to normal, and compliance with the anti-money laundering and counter-terrorism financing framework will improve.”
The report considered that “the adoption of the budget setting method over a three-year period in June 2023 constituted a shift in the practice used for setting budgets in Iraq, with the aim of improving the level of financial planning and continuing the implementation of important development projects in the medium term.”
The report stated that “despite the delay in starting to implement the budget this year, the public finance balance is expected to transform from a large surplus achieved in 2022 to a budget deficit in 2023,” adding that experts expect “the size of the government’s financial deficit to expand to a greater extent in the year.” 2024, reflecting the full annual impact of budget measures.”
He pointed out that the significant expansion in public finances, including a fundamental increase in the numbers of members of the public sector and retirement, creates permanent requirements for public spending that will put pressure on public funds in the medium term.
The IMF official continued, saying, “Ensuring the sustainability of public finances, in the context of uncertain oil price outlooks, requires a gradual tightening of the fiscal policy stance, and at the same time, working to ensure the protection of critical needs for infrastructure and social spending.”
This would also require mobilizing more non-oil revenues, containing the wage bill for government employees, and reforming the government retirement system.
These measures must be supported by moving towards a more targeted social safety net that works to provide better protection for vulnerable groups.
The report quoted Bolan as saying that the Fund’s mission welcomed the government plans aimed at strengthening public financial management, including welcoming the steps taken by the government towards establishing the unified treasury account, adding that the mission reiterated the importance of adhering to the framework for managing government guarantees.
In addition, the report stated that the Central Bank of Iraq has tightened its monetary policy appropriately, and this tightening includes increasing the interest rate on monetary policy tools and raising mandatory reserve requirements.
He pointed out that the mission welcomed the progress made in strengthening the domestic liquidity management framework, and
The report concluded by saying that “structural reforms aimed at stimulating economic diversification and creating job opportunities led by the private sector remain a pivotal factor in achieving sustainable and inclusive growth,” explaining that “priorities at this level include creating equal opportunities for the private sector through reforms in banking and in The electricity sector, reducing distortions in the labor market, and continuing to make efforts aimed at strengthening governance and reducing the spread of corruption.”
The IMF statement concluded by saying, “The Fund’s team of experts stands ready to support the Iraqi authorities in their reform efforts, and would like to thank them for the frank and fruitful discussions during this mission (the Amman meeting).”
Ngthening the fiscal framework and enhancing transparency in public financial management. The IMF emphasized the importance of these initiatives for building investor confidence and fostering sustainable economic growth.
The statement also highlighted the necessity for Iraq to diversify its economy beyond oil, citing the importance of non-oil sectors in contributing to GDP growth. Bolan pointed out that while reforms and improved financial policies are expected to lead to better economic conditions, persistent challenges, including reliance on oil, political instability, and security concerns, remain hurdles that the Iraqi government must address.
the collaboration between the Iraqi authorities and the IMF aims to foster economic stability and growth through sound fiscal policies, improved budget planning, and prioritization of essential public spending. The path forward will require careful management of resources, a commitment to reforms, and efforts to create a more resilient economy capable of withstanding external shocks.