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.