Statement by an IMF Mission on Iraq

November 21, 2017 The Iraqi authorities and IMF staff continued discussions on the third review of the Standby Arrangement. Good progress towards reaching agreement on a draft 2018 budget in line with the program. The Iraqi authorities and the staff of the International Monetary Fund (IMF) continued discussions in Amman from November 17 to 21, 2017 on the third review of Iraq’s 36-month Stand-By Arrangement (SBA). The IMF Executive Board approved the SBA on July 7, 2016 (See Press Release No. 16/321), and completed the second review on August 1, 2017 (See Press Release No. 17/311). At the end of the mission, Mr. Christian Josz, Mission Chief for Iraq, issued the following statement: “The Iraqi authorities and IMF staff continued discussions on the third review of the SBA and made good progress towards reaching agreement on a draft 2018 budget in line with the SBA.“During the discussions, the team met with Acting Governor of the Central Bank of Iraq (CBI), Dr. Ali Mohsen Ismail Al-Allaq, Acting Deputy Minister of Finance, Dr. Maher Johan, Deputy Minister of Planning, Dr. Qasim Enaya, Financial Adviser to the Prime Minister, Dr. Mudher Saleh, Chairman of the Board of Supreme Audit, and officials from the ministry of finance, CBI and the ministry of oil. The team would like to thank the Iraqi authorities for their cooperation and the open and productive discussions.” IMF Communications Department

The Spreading Rage at ISIS

The Spreading Rage at ISIS Terrorism has long had a gruesome role in conflicts, often among revolutionary groups so fanatically certain of their ends that they readily justify the most barbaric of means. But it can also turn with a vengeance against those who inflict it, as the Islamic State is learning with its most recently publicized atrocity — murdering a Jordanian air force pilot by burning him alive. The video of the killing was meant to dissuade Arabs from participating in the Western coalition against the group; instead, it has succeeded in fostering rage and revulsion against the jihadists throughout the Arab world. The Islamic State, the group also known as ISIS or ISIL, or “Daesh” among Arabs, has achieved a low in the annals of terrorism through its use of the Internet to post videos and images of executions, most by beheading, of bound, kneeling hostages — including, lately, two Japanese men. Although ISIS has inflicted death and inhumane torture on Arabs in its areas of operation in Syria and Iraq, feelings toward the group within various parts of the Arab world had been mixed, with many Arabs professing either indifference or varying degrees of sympathy for the jihadists. Jordan, a strong ally of the United States in the fight against ISIS, was also the largest source of recruits for the group. That changed after ISIS posted a video on Tuesday of the captured Jordanian pilot, First Lt. Moaz al-Kasasbeh, being burned alive in a cage. The killing had apparently taken place in early January, though ISIS cynically continued proposing to swap him for prisoners in Jordan until negotiations broke down after Jordan demanded proof that the pilot was alive. The Middle East erupted in fury at the video of the execution. The Islamic prohibition against immolation may have been a factor in the outpouring of anger among Arabs. King Abdullah II of Jordan promptly ordered the execution of two jihadists already sentenced to death in Jordan, and was welcomed by cheering crowds on his return from a visit to Washington. On Thursday, Jordanian planes responded by bombing Islamic State targets. Leaders in other nations condemned the murder of the pilot, and a grand imam in Cairo called for ISIS leaders themselves to face medieval-style executions. While Lieutenant Kasasbeh was still alive, or thought to be alive, many Jordanians, including his father, questioned their country’s participation in the campaign against ISIS. Now, ISIS faces potent censure and opposition from people across the region, and even among many who tolerated or ignored its past atrocities. If the outrage on display in the Middle East translates into a broader fight against barbaric jihadism, and a deeper commitment to eradicating it, Lieutenant Kasasbeh’s cruel death may prove not to have been in vain.

Abadi: Iraq is looking forward to the future economic by admin

February 5, 2015 • Iraq is looking forward to the future economic BAGHDAD / obelisk confirmed Prime Minister Haider al-Abadi, Wednesday, that Iraq is looking forward to the economic future is promising despite the current financial difficulties, stressing the need not to impact of the financial difficulties of the security forces in the fight against al-Daash. Abadi said office said in a statement, “obelisk” I got a copy of it, that the latter “received in his office today, the German ambassador in Baghdad, Eckhard Preveza,” noting that “During the meeting, they discussed ways to strengthen bilateral relations between the two countries, especially in the field of security cooperation and training and armament as well as cooperation in the economic, trade and investment fields. ” The statement added that “During the meeting also discussed the ongoing preparations for the visit of the Prime Minister Haider al-Abadi to Germany and the upcoming meeting with German Chancellor Angela Merkel and German officials on the sidelines of the Munich Security Conference which will be held next Saturday.” The statement quoted Abadi as saying that “Iraq is looking forward to the economic future is promising despite the current financial difficulties that do not want it to affect our security forces heroine which is locked in a war against Daash terrorist gangs”. almasalah.com Iraqi Dinar News http://iraqdinar.us

A tale of two shocks in Iraq

An Op-ed first publish in "Al Arabiya" by Masood Ahmed January 11, 2015 Iraq is facing a “double shock” from the self-proclaimed Islamic State of Iraq and Syria (ISIS) insurgency and the global plunge in oil prices. While the new government led by Prime Minister Haidar al-Abadi was formed with the express objective of dealing with the insurgency and addressing the humanitarian disaster it has caused, it is now facing another threat, this time of an economic nature, which brings into sharp focus the underlying vulnerabilities inherent in the country's heavy reliance on oil. A recent IMF mission discussed these challenges with Finance Minister Hoshyar Zebari and Deputy Central Bank Governor Zuhair Ali Akbar and their staff. The impact of conflict and declining oil prices Despite a stall in ISIS’s advance following targeted airstrikes by the coalition forces supporting the government, the conflict seems far from over. The violence has triggered a humanitarian tragedy, with more than 2.1 million internally displaced people and countless casualties among the civilian population. The insurgency is heavily affecting the non-oil economy through destruction of infrastructure and assets, trade disruptions, impeded access to fuel and electricity, and deterioration of investor confidence. These negative effects drove the IMF’s revision of GDP growth in Iraq in 2014 from over 6 percent in the spring, before the beginning of the insurgency, down to a contraction of about 0.5 percent—despite a better than expected performance of the oil sector, which expanded even in this difficult situation. The recent collapse in world oil prices has added to the tensions caused by the ISIS insurgency and is complicating efforts to deal with it. With oil export revenues accounting for more than 90 percent of total government revenues, Iraq has always been highly vulnerable to oil price volatility. Falling oil prices are already reducing government revenues (and dragging down the economy through lower government spending), while security and humanitarian expenditure due to the conflict are increasing. As a result, the government deficit is likely to have reached 5 percent of GDP in 2014. In addition, international reserves have fallen from over $77 billion at end-2013 to about $67 billion at end-November due to the combination of lower oil revenues and relatively high imports, particularly by the government. These figures exclude the Development Fund for Iraq (DFI) which was created in 2003 mainly to funnel Iraq’s oil revenues and serve the function of a fiscal buffer. The DFI was already down to $6.5 billion at end-2013, and declined further to about $4 billion in November. Hard choices How should Iraqi policy makers react to this difficult situation? The government’s highest priority is clearly resolving the security situation. But to do so, it needs a realistic and coherent fiscal policy that can support an effective use of the oil resources and strengthen government credibility vis-à-vis its international partners. The cabinet’s go-ahead for a draft 2015 budget based on a $60 oil price is an encouraging development in this regard. "The recent collapse in world oil prices has added to the tensions caused by the ISIS insurgency and is complicating efforts to deal with it". There are other positive signs that the government is taking a more pragmatic approach to its budgetary difficulties. Baghdad and Erbil have long been embroiled in a dispute over the Kurdistan Regional Government’s (KRG) oil oxports. In December, they reached a deal, endorsed by the cabinet, to share in the export and revenues from oil fields in Kurdistan. While the agreement does not address the fundamental questions of which fields belong to the KRG and its right to export independently, it is still an important step towards normalization of Baghdad-Erbil relations, a sign of unity in face of mounting threats from ISIS. More recently, the government obtained a one-year suspension on the payment of its war reparations to Kuwait, which will provide some fiscal space in 2015. However, the draft 2015 budget still relies on relatively optimistic revenue assumptions and envisages a large deficit which will be difficult to finance, even if oil prices do not decline further. Therefore, the government might have to face hard choices in reducing the spending envelope even more than the draft budget. With nominal government spending growing almost 14 percent on average since 2004, Iraq has gotten used to an ever expanding role of the public sector, so reversing this trend will be painful. But the government could nevertheless push further in systematically rationalizing expenditures, for example by reducing subsidies, particularly in the electricity sector; streamlining public employment (starting with a census of government employees to weed out ghost workers); phasing out transfers to state-owned enterprises; and prioritizing investment projects. Looking forward Iraq also needs to look beyond the current emergency. I see three main areas where work is needed to increase the capacity of the economy to handle future crises. First, the country would be advised to push ahead with the transition to a market-based economic system. This requires a continued effort to reduce the role of the government by restructuring state-owned banks and enterprises while implementing reforms that remove obstacles and administrative impediments to a competitive private sector and a sound financial sector. The goal is to build a lively, diversified economy which does not depend so heavily on government spending and, ultimately, on oil money. Second, Iraq would benefit from a strengthened capacity to manage oil resources through better public financial management practices, and resume accumulating fiscal buffers that would allow the government to implement anti-cyclical policies when needed. This is best done through the rehabilitation of the Development Fund for Iraq as a transparent and efficient tool for managing oil resources. Third, the country could look into how its huge oil resources are redistributed among the population, and how fiscal decentralization institutions and practices can improve fairness and sense of belonging among all citizens. In sum, faced with the "double shock" of lower and falling oil prices and the ISIS insurgency, pushing through such a transformative reform agenda becomes even more urgent. The challenge for Iraq's new leadership is to address not only the current crisis and provide for the millions of refugees who are in dire need of assistance, but also to lay the foundations to address the long-standing weaknesses of its economy.

Betting on Iraq

Iraq Dinar

Jim Cramer on the Iraq Dinar