IMF to provide $3.6 bn loan to Iraq
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Last Updated: Thursday, February 25, 2010, 11:24
Washington: The International Monetary Fund has approved a USD 3.6 billion loan to Iraq to help the war-torn country meet pressing financial needs.

The IMF executive board approved the two-year so-called Stand-By Arrangement for Iraq "to cover the country's balance of payments needs" after the economy was hit hard by falling oil prices in 2009, the Washington-based institution said yesterday.

About USD 455 million were made immediately available to the Iraqi authorities.

Declining oil prices last year left Iraq, heavily dependent on oil exports, with a public deficit of 20 percent of economic output, Ron van Rooden, IMF mission chief in Iraq, said in a conference call with reporters.

The IMF-supported program is aimed at reducing the budget gap to 19 percent of GDP in 2010 and 6.0 percent in 2011, and posting a budget surplus in 2012.

"It's clearly a challenging program," he added.

Van Rooden said that by containing government spending at current levels and catching up on much-needed infrastructure investments, the fiscal gap will be financed by the new IMF loan, the World Bank and other donors.

The IMF and Iraqi authorities late last year had discussed a USD 5 billion loan, when oil prices were lower than they are now, he said.

A rise in oil prices has helped trim the country's financial needs.


First Published: Thursday, February 25, 2010, 11:24

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