Iraq completes three economic reform programs supported by IMF

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Iraq completes three economic reform programs supported by IMF

Posted by Shahid Abbas

Wednesday, 10 March 2010 16:29

Central_Bank_of_Iraq

Since 2004, Iraq has successfully completed three economic reform programs supported by the International Monetary Fund (IMF): one under the Emergency Post Conflict Assistance (EPCA) facility and two (precautionary) Stand-By Arrangements (SBA). During this period, Iraq has made considerable progress under very difficult circumstances, including a very challenging security situation. Iraq has successfully reduced inflation, showed fiscal discipline, and started rebuilding our economic institutions. These achievements have helped us to obtain generous debt relief from Paris Club and other creditors that has substantially improved our external position.

These hard-won gains of recent years could be undermined, however, by the large drop in oil prices from their peak levels of mid-2008. After reaching a high in July 2008, when Iraqi crude oil sold for $124 per barrel, prices fell to a low of $35 per barrel in January 2009, before slowly recovering to a level of around $68 per barrel in the second half of 2009. The average export price in 2009 was $57 per barrel, well below the average export price of $92 per barrel in 2008. In addition, due to dire infrastructural problems, the volume of oil exports in the early months of the year fell below 2008 levels (to 1.75 million barrels per day (mbpd) in the first five months). Iraq has been working to address these problems and oil exports reached 2 mbpd towards the end of 2009, bringing the average for the year to 1.88 mbpd.

As the proceeds from oil exports account for the bulk of our total export receipts, and for the majority of government revenues, the lower oil prices are posing considerable challenges to our internal and external economic stability. To maintain macroeconomic stability, and foster growth and employment, Iraq has adopted an economic adjustment program for 2010