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IMF Staff Completes 2019 Article IV Mission on Iraq.

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8 minutes ago, Laid Back said:

The economic recovery has been sluggish, post-war reconstruction is limited, and large current spending increases risk placing the public finances and central bank reserves on an unsustainable path. Moreover, combatting corruption is critical to promote the effectiveness of public institutions and to support system" rel="">support private-sector investment and job creation.

 Really, who would have thought.

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“Addressing governance weaknesses and corruption vulnerabilities is critical to achieving the described policy objectives. As a first step, the authorities need to develop a comprehensive understanding of the corruption risks present in Iraq and then implement policies to tackle these risks in a coherent and coordinated manner. The legislative framework needs to be strengthened to effectively prevent officials from abusing their position or misusing state resources. To this end, laws strengthening the asset declaration regime and criminalizing illicit gains should be rapidly adopted. Furthermore, the independence and integrity of bodies involved in combatting corruption should be ensured and the AML/CFT regime should be mobilized to support system" rel="">support anti-corruption efforts. 

The team will prepare a report that, subject to management approval, is tentatively scheduled to be considered by the IMF’s Executive Board in July 2019.

 

 

Here again, really who would have thought corruption is a problem in any government

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This report by the IMF doesn't seem so great to me.  Sounds like nothing but problems.  

Anybody see anything good here?

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3 hours ago, Laid Back said:

The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

 

9 minutes ago, Floridian said:

This report by the IMF doesn't seem so great to me.  Sounds like nothing but problems.  

Anybody see anything good here?

 

Does the above disclaimer make you feel any better...? 

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Don't like to point out that to promote the private sector and export more

product would be to follow China's model of under valuing their currency. Not

what we want to happen....It has been pointed out many times that the so-called

project rate is the real and actual rate. To move from there would involve more dinar

per dollar,not less.   jmho

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I agree with Floridian. This doesn't read well to me. I hate to sound negative but I do not think we have much hope of any change in rate any time soon. This just highlights to me how far behind the rest of the world they really are. Plus if the government, in general is as corrupt as it appears we could still be sitting here in 2021! 😞.. I truly hope not.

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4 minutes ago, Half Crazy Runner said:

 

 

Does the above disclaimer make you feel any better...? 

 

No, not at all.  I read that also.  Do you think the Executive Board will say something better than the grunts doing the work?

I think this report came out earlier than expected and is extremely disappointing.  Did they say anything good that I might have missed?

 

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Short ( critique ) version of the 2019 IMF Article IV Mission Iraq -  -  - wait for it .....

 

 “ SNAFU with a FUBAR addendum “ 

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1 hour ago, Floridian said:

This report by the IMF doesn't seem so great to me.  Sounds like nothing but problems.  

Anybody see anything good here?

 

IMF is reporting as is. Iraq can't be great (not yet), they are under IMF article 14.

The whole exercise of article 4 consultations is find out where they need to improve and how.

 

Good news is there's no mention of MCP, exchange restrictions or 'bad'/unfair relationship with Kurdistan.

 

Some of the concerns pointed out by IMF (financial and budget spending) are actually being taken care of under the Fin.Admin Law.

 

Just my opinion of course. So I think this report is OK. I never expected them to be great....and we all know that.

Edited by zul
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1 hour ago, Floridian said:

Do you think the Executive Board will say something better than the grunts doing the work?

 

1 hour ago, Donziman said:

Don't like to point out that to promote the private sector and export more

 product would be to follow China's model of under valuing their currency. Not

what we want

 I believe the board is well aware of how dysfunctional Iraq is. Iraq should definitely build the private sector and their manufacturing capabilities. So they can have  something other than oil to export. Will that ever happen? Doubtful. A realistic rate for their currency would be around $3.25  if they were  anywhere close to having their s*** together Because it is so dependent on oil.   So. In my personal recommendation to the board let’s make it a buck and a quarter and call it a day 😎

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Policy changes and structural reforms—including to improve governance—are essential to maintain sustainability and lay the foundations for inclusive growth. - IMF's Gray
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International Monetary Fund for Iraq: Fighting corruption is crucial to suppor t private sector investment

International Monetary Fund for Iraq: Fighting corruption is crucial to support private sector investment
The International Monetary Fund is archival
 06 May 2019 10:48 PM

BAGHDAD (Reuters) - The weakness of Iraq's economy has fallen in the short term in 2018, with the budget surplus and the accumulation of central bank reserves, and post-war reconstruction has been limited so far, the IMF said.

The IMF expects the fiscal deficit to rise over the medium term, with no policy changes, it will be difficult to maintain capital spending, and growth is likely to slow significantly.

 

Strict control over current spending, particularly wages, and interim measures to increase non-oil revenues would provide room for increased public investment and the construction of temporary financial stores, the IMF said in a statement on Monday.

A team from the International Monetary Fund ( IMF ), led by Gavin Gray, visited Amman from April 26 to May 2 for discussions with the Iraqi authorities in the context of Article IV consultations of 2019.

At the end of the visit, Gavin Gray said that the end of the war with the boom and the revival of oil prices provide an opportunity to rebuild the country and meet long-standing social and economic needs.

However, the challenges to achieving these goals are enormous, the economic recovery has been slow, post-war reconstruction is limited, and the current large spending increases the risk of placing public funds and central bank reserves on an unsustainable path.

In addition, combating corruption was crucial to enhancing the effectiveness of public institutions, supporting private sector investment and creating jobs.

Non-oil growth is expected to rise to 5.4 percent in 2019 on the back of increased investment spending, while the fiscal deficit is expected to rise over the medium term, requiring funding that could lead to private sector congestion or erosion of central bank reserves.

He noted that in these circumstances, it would be difficult to maintain capital expenditure, and growth will slow significantly.

Changes in policies and structural reforms - including improved management - were essential to sustain medium-term sustainability and lay the foundations for inclusive growth.

He stressed that fiscal policy should aim to gradually increase public investment while building temporary financial stores. To make room for this, staff recommended savings of about 9 per cent of GDP over the medium term through tight control of current expenditure, In particular public sector wages, and phased measures to increase non-oil revenues.

In his statement, the head of the Sandango mission stated that setting the ceilings for current expenditures in the 2020 budget and beyond would strengthen the fiscal framework's capacity to support increased capital expenditure and to adjust to oil price shocks.

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9 hours ago, Floridian said:

 

No, not at all.  I read that also.  Do you think the Executive Board will say something better than the grunts doing the work?

I think this report came out earlier than expected and is extremely disappointing.  Did they say anything good that I might have missed?

 

Your answer, about the Exec Board, is in the article and we will have to wait for the report to get the second answer.

 

The team will prepare a report that, subject to management approval, is tentatively scheduled to be considered by the IMF’s Executive Board in July 2019."

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IMF calls for structural reforms

International Monetary Fund sets 3 structural measures to reform Iraq's finances, including "wages a 820172135136471242965


The IMF called for structural reforms , including improved governance, to sustain medium-term sustainability and to lay the foundations for inclusive growth. 

He said in a statement that a team of international criticism had held discussions with the Iraqi authorities between April 25 and May 2 in the context of Article IV consultations of 2019. 

The Fund explained that the major reforms that the Iraqi authorities should contain, contain public sector wages, Reforms in the electricity sector in Iraq to address the poor quality of services, and reduce the high costs of electricity in the budget. 

The Fund called for supporting the management of public finances in Iraqby strengthening the legal framework, improving compliance and other control systems in order to minimize the misuse of public resources and achieve budgetary discipline.

The Fund underscored the importance of a strong plan to restructure large-scale public sector banks, coupled with enhanced banking supervision, to ensure financial stability, and to promote financial development and financial inclusion. 

The Fund stressed the need to address weak governance in Iraq , effectively preventing officials from misusing their positions or misusing state resources. 

He urged ensuring the independence and integrity of the anti-corruption bodies and activating the AML / CFT system to support anti-corruption efforts. 

The IMF considered that the end of the war on a buoyant organization and the recovery of oil prices were an opportunity to rebuild Iraq and overcome long-standing socio-economic problems. 

"The challenges to achieving these goals are enormous," he said.

 

https://www.thebaghdadpost.com/ar/Story/165279/صندوق-النقد-الدولي-يدعو-إلى-القيام-بإجراءات-إصلاحات-هيكلية
 
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The International Monetary Fund sets out 3 structural measures to reform Iraq's finances, including wages and electricity

The International Monetary Fund sets out 3 structural measures to reform Iraq's finances, including wages and electricity
International Monetary Fund
 06 May 2019 11:03 PM

BAGHDAD - The head of the International Monetary Fund's mission to Iraq, Gavin Gray, has recommended a number of key reforms Iraq must follow to reform the financial structure.

The head of the IMF mission said that the first of these reforms was public sector wages, which could reduce short-term spending pressures through compensation measures such as the identification of allowances, bonuses and other non-core payments, and full replacement of pensioners.

Structural measures would be required over the medium term, based on a functional review of the workforce as well as a deeper reform of the civil service once new human resource and information management systems were in place.

The second recommendation on electricity reforms, which was seen as an essential factor in addressing poor quality of service and reducing high budget costs, was due to the modest rates of consumer tariffs, the non-payment of chronic electricity bills, poor maintenance and excessive reliance on expensive sources of generation, All stages of generation, transmission, and distribution.

The head of the IMF mission stressed the importance of ensuring protection of the poor and the most vulnerable during this reform.

The latest recommendation of the head of the IMF mission on strengthening public financial management, in which he explained that strengthening the legal framework and improving compliance and other oversight systems was a key element in reducing misuse of public resources and restoring budgetary discipline.

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IMF completes Article IV consultations on Iraq

IMF completes Article IV consultations on Iraq
International Monetary Fund
 07 May 2019 12:22 PM

A team from the International Monetary Fund, headed by Gavin Gray , visited the Jordanian capital of Amman from 25 April to 2 May, with the aim of holding discussions with the Iraqi authorities in the context of Article IV consultations , For 2019.

At the end of the visit, according to a statement by the IMF, Gray said the end of the war on a buoyant organization and the resurgence of oil prices offer an opportunity to rebuild Iraq and overcome long-standing socio-economic problems.

"But the challenges to achieving these goals are enormous, the pace of economic recovery is still slow, reconstruction is very limited after the war is over, and the large current spending increases risk, putting public funds and central bank reserves on track Its continuity can not be sustained.

Anti-corruption was very important to enhance the effectiveness of public institutions, to support investment efforts and to create employment by the private sector .

"In the short term, the short-term weakness is reversed in 2018, with a surplus in the budget and a build-up in the central bank's reserves," he said.

Non-oil growth is expected to rise to 5.4 percent in 2019 on the back of increased investment spending; however, fiscal deficits are expected to rise in the medium term, requiring funding that could squeeze the private sector or erode the central bank's reserves.

Under these conditions, capital spending may be difficult to sustain, and growth will likely slow considerably .

" Therefore, policy changes and structural reforms - including improved governance - are essential to sustain medium-term economic sustainability and to lay the foundations for inclusive growth," he said .

"The fiscal policy should be based on the gradual expansion of public investment, while at the same time building safety margins," said the head of the mission.

"To find the required space, IFAD staff recommends budget savings of about 9 percent of GDP over the medium term by tightening control over current spending, especially on public sector wages, and taking phased measures to boost revenue Non-oil.

He explained that setting ceilings for current budget spending, starting with the 2020 budget onwards, would enhance the fiscal framework's ability to support a higher volume of investment and adapt to the shocks in oil prices. Major reforms should include :

The containment of public sector wages; short-term spending pressures could be suppressed through compensatory measures, such as a ceiling on allowances, emoluments and other non-wage payments, combined with the enforcement of natural decline in public sector staffing.

Structural measures in the medium term, based on a functional workforce review and deeper reforms in the civil service system, will be necessary once new human resources and information management systems are put in place .

Gray said reforms in the electricity sector were key to addressing poor service quality and cutting high electricity costs in the budget because of low tariff rates, chronic non-payment of electricity bills and poor maintenance .

On the support of public finance management, strengthening the legal framework, improving compliance and other control systems were key factors aimed at minimizing the misuse of public resources and restoring discipline in the budget .

In the financial sector, a strong plan to restructure large-scale public sector banks and the strengthening of bank controls was necessary to ensure financial stability and would help promote financial development and financial coverage.

The strengthening of AML / CFT controls and the strengthening of supervision would help Iraq prevent the misuse of the Iraqi financial sector for the purpose of harvesting criminal proceeds from money laundering and terrorist financing .

He called on the IMF to address the weakness of governance and vulnerabilities that spread through corruption, which he considered a very important factor in achieving the goals described in the policies.

The Fund called for ensuring the independence and integrity of anti-corruption bodies, and the AML / CFT system should be activated to support anti-corruption efforts .

The IMF team will prepare a report, subject to approval by the Administration, and is tentatively scheduled for consideration by the Executive Board of the Fund in July 2019 .

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May 6, 2019

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

Near-term vulnerabilities subsided in 2018, with the budget in surplus and a build-up in central bank reserves. Post-war reconstruction has been limited so far.

Fiscal deficits are projected to rise over the medium term, absent policy changes, and it will be hard to sustain capital spending. Growth is likely to slow markedly.

Tight control over current spending, particularly wages, and phased measures to boost non-oil revenue would make space for scaling up public investment and building fiscal buffers.
An International Monetary Fund (IMF) team led by Gavin Gray visited Amman from April 26 to May 2, to hold discussions with the Iraqi authorities in the context of the 2019 Article IV Consultation. At the end of the visit, Mr. Gray made the following statement:
 
“The end of the war with ISIS and a rebound in oil prices provide an opportunity to rebuild the country and address long-standing socio-economic needs. However, the challenges to achieving these objectives are formidable. The economic recovery has been sluggish, post-war reconstruction is limited, and large current spending increases risk placing the public finances and central bank reserves on an unsustainable path. Moreover, combatting corruption is critical to promote the effectiveness of public institutions and to support private-sector investment and job creation.
 
“Near-term vulnerabilities subsided in 2018, with the budget in surplus and a build-up in central bank reserves. Non-oil growth is expected to increase to 5.4 percent in 2019 on the back of higher investment spending. However, fiscal deficits are projected to rise over the medium term, requiring financing that may crowd out the private sector or erode central bank reserves. In these circumstances, it would be hard to sustain capital spending, and growth would slow markedly.
 
“Policy changes and structural reforms—including to improve governance—are therefore essential to maintain medium-term sustainability and lay the foundations for inclusive growth.
 
“Fiscal policy should aim to scale up public investment gradually while building fiscal buffers. To make space for this, staff recommends budgetary savings of around 9 percent of GDP over the medium term through tight control of current spending, particularly public-sector wages, and phased measures to boost non-oil revenue. Setting ceilings on current expenditure in the 2020 budget on-wards would strengthen the fiscal framework’s capacity to support higher capital spending and to adapt to oil price shocks. Key reforms should include:
 
Containing public-sector wages. Spending pressures could be dampened in the short run through compensation measures such as capping allowances, bonuses and other non‑base wage payments, and by not fully replacing retirees. Structural measures will be required over the medium term, based on a functional workforce review as well as deeper civil service reform once new HR management and information systems are in place.

 
Electricity reforms are key to addressing the weak quality of service and reducing the high budgetary costs, due to modest tariff rates, chronic non-payment of electricity bills, poor maintenance and over-reliance on expensive generation sources, coupled with losses throughout the generation, transmission, and distribution process. It would be important to ensure that the poor and most vulnerable are protected throughout this reform.
 
Bolstering public financial management. Enhancing the legal framework and improving commitment and other control systems are key to minimizing misuse of public resources and restoring budgetary discipline.
 
“In the financial sector, a robust plan to restructure the large public banks coupled with enhanced supervision is essential to secure financial stability and will help promote financial development and inclusion. Strengthening anti-money laundering and countering financing terrorism (AML/CFT) controls and oversight will help prevent Iraq’s financial sector from being misused for the laundering of criminal proceeds and terrorist financing.
 
“Addressing governance weaknesses and corruption vulnerabilities is critical to achieving the described policy objectives. As a first step, the authorities need to develop a comprehensive understanding of the corruption risks present in Iraq and then implement policies to tackle these risks in a coherent and coordinated manner.

The legislative framework needs to be strengthened to effectively prevent officials from abusing their position or misusing state resources. To this end, laws strengthening the asset declaration regime and criminalizing illicit gains should be rapidly adopted. Furthermore, the independence and integrity of bodies involved in combatting corruption should be ensured and the AML/CFT regime should be mobilized to support anti-corruption efforts.

The team will prepare a report that, subject to management approval, is tentatively scheduled to be considered by the IMF’s Executive Board in July 2019.
 
“The IMF team would like to thank the authorities for the candid and constructive discussions during this visit.”
 
MEDIA RELATIONS
PRESS OFFICER: WAFA AMR
PHONE: +1 202 623-7100 EMAIL: MEDIA@IMF.ORG

https://www.imf.org/en/News/Articles/2019/05/06/pr19142-Iraq-imf-staff-completes-2019-article-iv-mission?cid=em-COM-123-38756
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16 hours ago, zul said:

Good news is there's no mention of MCP, exchange restrictions or 'bad'/unfair relationship with Kurdistan

 

Also, there is no mention of the 2% compliance which they have done over a year now. Strange, before this they couldn't do it for shift !

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Iraq economy has 'opportunity' after war and recovering oil prices

A view of the destruction in the old city of Mosul. Iraq needs to spend heavily on reconstruction of areas devastated by war. AFP A view of the destruction in the old city of Mosul. Iraq needs to spend heavily on reconstruction of areas devastated by war. AFP 
 

May 7, 2019

While war-torn Iraq has turned a page after battling ISIS and a recovery in oil prices from a three-year slump provides impetus to move forward, the country still needs to address economic challenges, according to the International Monetary Fund.

The near-term vulnerabilities in Iraq subsided last year with a build-up in central bank reserves but the postwar reconstruction is limited and control on spending will curtail the country’s economic growth markedly, said the IMF.

“The end of the war with ISIS and a rebound in oil prices provide an opportunity to rebuild the country and address long-standing socio-economic needs. However, the challenges to achieving these objectives are formidable,” said IMF’s Gavin Gray, who led a consultation to the Iraqi government. “Combating corruption is critical to promote the effectiveness of public institutions and to support private-sector investment and job creation.”

Fiscal deficits in the country are expected to rise over the medium-term and in absence of policy changes, it will be hard to sustain capital spending, the Washington-based lender said, following its annual assessment with Iraqi authorities. The country's tight control over spending, particularly wages, and phased measures to boost non-oil revenue, however, would allow to build fiscal buffers.

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IMF Staff Completes 2019 Article IV Mission on Iraq

May 6, 2019

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
  • Near-term vulnerabilities subsided in 2018, with the budget in surplus and a build-up in central bank reserves. Post-war reconstruction has been limited so far.
  • Fiscal deficits are projected to rise over the medium term, absent policy changes, and it will be hard to sustain capital spending. Growth is likely to slow markedly.
  • Tight control over current spending, particularly wages, and phased measures to boost non-oil revenue would make space for scaling up public investment and building fiscal buffers.

An International Monetary Fund (IMF) team led by Gavin Gray visited Amman from April 26 to May 2, to hold discussions with the Iraqi authorities in the context of the 2019 Article IV Consultation. At the end of the visit, Mr. Gray made the following statement:

 

“The end of the war with ISIS and a rebound in oil prices provide an opportunity to rebuild the country and address long-standing socio-economic needs. However, the challenges to achieving these objectives are formidable. The economic recovery has been sluggish, post-war reconstruction is limited, and large current spending increases risk placing the public finances and central bank reserves on an unsustainable path. Moreover, combatting corruption is critical to promote the effectiveness of public institutions and to support private-sector investment and job creation.

 

“Near-term vulnerabilities subsided in 2018, with the budget in surplus and a build-up in central bank reserves. Non-oil growth is expected to increase to 5.4 percent in 2019 on the back of higher investment spending. However, fiscal deficits are projected to rise over the medium term, requiring financing that may crowd out the private sector or erode central bank reserves. In these circumstances, it would be hard to sustain capital spending, and growth would slow markedly.

 

“Policy changes and structural reforms—including to improve governance—are therefore essential to maintain medium-term sustainability and lay the foundations for inclusive growth.

 

“Fiscal policy should aim to scale up public investment gradually while building fiscal buffers. To make space for this, staff recommends budgetary savings of around 9 percent of GDP over the medium term through tight control of current spending, particularly public-sector wages, and phased measures to boost non-oil revenue. Setting ceilings on current expenditure in the 2020 budget onwards would strengthen the fiscal framework’s capacity to support higher capital spending and to adapt to oil price shocks. Key reforms should include:

 

  • Containing public-sector wages. Spending pressures could be dampened in the short run through compensation measures such as capping allowances, bonuses and other non‑base wage payments, and by not fully replacing retirees. Structural measures will be required over the medium term, based on a functional workforce review as well as deeper civil service reform once new HR management and information systems are in place.

     

  • Electricity reforms are key to addressing the weak quality of service and reducing the high budgetary costs, due to modest tariff rates, chronic non-payment of electricity bills, poor maintenance and over-reliance on expensive generation sources, coupled with losses throughout the generation, transmission, and distribution process. It would be important to ensure that the poor and most vulnerable are protected throughout this reform.

     

  • Bolstering public financial management. Enhancing the legal framework and improving commitment and other control systems are key to minimizing misuse of public resources and restoring budgetary discipline.

 

“In the financial sector, a robust plan to restructure the large public banks coupled with enhanced supervision is essential to secure financial stability and will help promote financial development and inclusion. Strengthening anti-money laundering and countering financing terrorism (AML/CFT) controls and oversight will help prevent Iraq’s financial sector from being misused for the laundering of criminal proceeds and terrorist financing.

 

“Addressing governance weaknesses and corruption vulnerabilities is critical to achieving the described policy objectives. As a first step, the authorities need to develop a comprehensive understanding of the corruption risks present in Iraq and then implement policies to tackle these risks in a coherent and coordinated manner. The legislative framework needs to be strengthened to effectively prevent officials from abusing their position or misusing state resources. To this end, laws strengthening the asset declaration regime and criminalizing illicit gains should be rapidly adopted. Furthermore, the independence and integrity of bodies involved in combatting corruption should be ensured and the AML/CFT regime should be mobilized to support anti-corruption efforts.

The team will prepare a report that, subject to management approval, is tentatively scheduled to be considered by the IMF’s Executive Board in July 2019.

 

“The IMF team would like to thank the authorities for the candid and constructive discussions during this visit.”

 

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The IMF mission issues its report on Iraq

 
Baghdad / Al-Sabah 
 
 
The IMF mission team completed article IV consultations of 2019 on Iraq.
The IMF's report said that weaknesses have receded in the near term in 2018, with a surplus in the budget and accumulation of reserves in the central bank, and post-war reconstruction is still limited so far.
An International Monetary Fund (IMF) team led by Ghafen Ghuri visited the Jordanian capital Amman with the aim of holding discussions with the Iraqi government delegation in the context of Article IV consultations for 2019. 
 
Economic recovery
At the end of the visit, the head of the International Monetary Fund team, who did not make a statement, said: "The end of the war on a buoyant organization and the resurgence of oil prices are an opportunity to rebuild Iraq and overcome long-standing socio-economic problems. "The economic recovery has been slow and reconstruction is very limited after the war is over. Combating corruption is very important to enhance the effectiveness of public institutions, support investment efforts, and create employment opportunities from the private sector."
"Weaknesses in the near term have receded in 2018, with a surplus in the budget and accumulation of central bank reserves, and non-oil growth is expected to rise to 5.4 percent in 2019 on the back of increased investment spending," he said. 
 
Public Finance
"Therefore, structural reforms - including better governance - are necessary to sustain medium-term economic sustainability, to lay the foundations for inclusive growth, and fiscal policy should be based on gradual expansion of public investment," he said. At the same time, to build safety margins and to create the required space, IFAD staff recommends budget savings of about 9 percent of GDP over the medium term by tightening control over current spending, particularly on public sector wages , And to take phased measures to boost non-oil revenues. Setting ceilings for current budgetary spending, starting with the 2020 budget onwards, will strengthen the fiscal framework's ability to support a higher volume of investment and adapt to the shocks to oil prices " . 
 
Quality of services
The main reforms should include "containment of public sector wages, reforms in the electricity sector and an essential element in addressing poor service quality and reducing the high costs of electricity in the budget because of the low tariff of electricity, the chronic non-payment of electricity bills, poor maintenance , Over-reliance on expensive electricity sources, and associated losses (lost power) throughout the generation, transmission and distribution of electricity. It is important to ensure that the poor and the most vulnerable are protected throughout the duration of these reforms. " He confirmed support for public money management. Strengthening the legal framework, improving compliance and other control systems are key factors aimed at minimizing the misuse of public resources and restoring discipline in the budget.
Strong plan
"In the financial sector, a strong plan to restructure large-scale public sector banks, coupled with enhanced banking supervision, is essential to secure financial stability and will help promote financial development and financial inclusion," he said. Strengthening AML / CFT controls and strengthening supervision will help Iraq prevent abuse of the Iraqi financial sector for the purpose of harvesting criminal proceeds from money laundering and terrorist financing. "
He stressed that "addressing weak governance and vulnerabilities through which corruption spreads, and it is a very important factor in achieving the goals described in the policies and as a first step, the Iraqi authorities to develop a comprehensive understanding of the risks of corruption in Iraq, and then work on the implementation of policies to eliminate These risks in a homogeneous and coordinated manner. " In conclusion, he said: "The mission of the Fund Mission would like to thank the Iraqi authorities for their frankness in holding constructive discussions in the course of doing so 
the visit".
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taff Completes 2019 Article IV Mission on Iraq

May 6, 2019

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
  • Near-term vulnerabilities subsided in 2018, with the budget in surplus and a build-up in central bank reserves. Post-war reconstruction has been limited so far.
  • Fiscal deficits are projected to rise over the medium term, absent policy changes, and it will be hard to sustain capital spending. Growth is likely to slow markedly.
  • Tight control over current spending, particularly wages, and phased measures to boost non-oil revenue would make space for scaling up public investment and building fiscal buffers.

An International Monetary Fund (IMF) team led by Gavin Gray visited Amman from April 26 to May 2, to hold discussions with the Iraqi authorities in the context of the 2019 Article IV Consultation. At the end of the visit, Mr. Gray made the following statement:

 

“The end of the war with ISIS and a rebound in oil prices provide an opportunity to rebuild the country and address long-standing socio-economic needs. However, the challenges to achieving these objectives are formidable. The economic recovery has been sluggish, post-war reconstruction is limited, and large current spending increases risk placing the public finances and central bank reserves on an unsustainable path. Moreover, combatting corruption is critical to promote the effectiveness of public institutions and to support private-sector investment and job creation.

 

“Near-term vulnerabilities subsided in 2018, with the budget in surplus and a build-up in central bank reserves. Non-oil growth is expected to increase to 5.4 percent in 2019 on the back of higher investment spending. However, fiscal deficits are projected to rise over the medium term, requiring financing that may crowd out the private sector or erode central bank reserves. In these circumstances, it would be hard to sustain capital spending, and growth would slow markedly.

 

“Policy changes and structural reforms—including to improve governance—are therefore essential to maintain medium-term sustainability and lay the foundations for inclusive growth.

 

“Fiscal policy should aim to scale up public investment gradually while building fiscal buffers. To make space for this, staff recommends budgetary savings of around 9 percent of GDP over the medium term through tight control of current spending, particularly public-sector wages, and phased measures to boost non-oil revenue. Setting ceilings on current expenditure in the 2020 budget onwards would strengthen the fiscal framework’s capacity to support higher capital spending and to adapt to oil price shocks. Key reforms should include:

 

  • Containing public-sector wages. Spending pressures could be dampened in the short run through compensation measures such as capping allowances, bonuses and other non‑base wage payments, and by not fully replacing retirees. Structural measures will be required over the medium term, based on a functional workforce review as well as deeper civil service reform once new HR management and information systems are in place.

     

  • Electricity reforms are key to addressing the weak quality of service and reducing the high budgetary costs, due to modest tariff rates, chronic non-payment of electricity bills, poor maintenance and over-reliance on expensive generation sources, coupled with losses throughout the generation, transmission, and distribution process. It would be important to ensure that the poor and most vulnerable are protected throughout this reform.

     

  • Bolstering public financial management. Enhancing the legal framework and improving commitment and other control systems are key to minimizing misuse of public resources and restoring budgetary discipline.

 

“In the financial sector, a robust plan to restructure the large public banks coupled with enhanced supervision is essential to secure financial stability and will help promote financial development and inclusion. Strengthening anti-money laundering and countering financing terrorism (AML/CFT) controls and oversight will help prevent Iraq’s financial sector from being misused for the laundering of criminal proceeds and terrorist financing.

 

“Addressing governance weaknesses and corruption vulnerabilities is critical to achieving the described policy objectives. As a first step, the authorities need to develop a comprehensive understanding of the corruption risks present in Iraq and then implement policies to tackle these risks in a coherent and coordinated manner. The legislative framework needs to be strengthened to effectively prevent officials from abusing their position or misusing state resources. To this end, laws strengthening the asset declaration regime and criminalizing illicit gains should be rapidly adopted. Furthermore, the independence and integrity of bodies involved in combatting corruption should be ensured and the AML/CFT regime should be mobilized to support anti-corruption efforts.

The team will prepare a report that, subject to management approval, is tentatively scheduled to be considered by the IMF’s Executive Board in July 2019.

 

“The IMF team would like to thank the authorities for the candid and constructive discussions during this visit.”

 

 

IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: WAFA AMR

PHONE: +1 202 623-7100EMAIL: MEDIA@IMF.ORG

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