IMF Executive Board Concludes 2019 Article IV Consultation with Iraq

[gregp]

Directors looked forward to continued close engagement between the authorities and the Fund in the context of post program monitoring.

[gregp]

Thanks, Englishman. 

[6ly410]

19 minutes ago, The Englishman said:

In this context, Directors welcomed the newly adopted General Financial Management Law and encouraged its full implementation. 

 

[6ly410]

20 minutes ago, The Englishman said:

Directors underscored that an overhaul of the banking sector is necessary to maintain financial stability.

 

[Synopsis]

WOWZERS!!!

 

Duh IMF FINALLY got the lead, er, reports out!!!

 

HERE is one:

 

IMF Executive Board Concludes 2019 Article IV Consultation with Iraq

July 26, 2019

On July 19, 2019, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation ^[1] with Iraq.

An improved security situation and the recovery in oil prices have improved near-term vulnerabilities. Large fiscal and current account surpluses—around 8 and 6 percent of GDP, respectively—were recorded in 2018, allowing the government to retire domestic debt and accumulate fiscal buffers. Gross international reserves reached $65 billion by end-2018.

However, post-war reconstruction and economic recovery have been slow. Non-oil GDP rose by only 0.8 percent year-on-year in 2018 in a context of weak execution of reconstruction and other public investment. Overall GDP contracted by around 0.6 percent as oil production was cut to comply with the OPEC+ agreement.

The 2019 budget implies a sizable fiscal loosening that will reverse the recent reduction in vulnerabilities. Current spending is expected to increase by 27 percent year-on-year, in part due to a higher public sector wage bill, while revenues will be dampened by the abolition of non-oil taxes. As a result, the budget is projected to shift to a deficit of 4 percent of GDP in 2019, and reserves are projected to decline.

The fiscal and external positions are expected to continue to deteriorate over the medium term absent policy changes—with reserves falling below adequate levels and fiscal buffers eroded. Although the level of public debt will remain sustainable, gross fiscal financing needs will increase. Non-oil GDP growth is projected to reach 5½ in 2019 but subside over the medium term.

In a context of highly volatile oil prices, the major risk to the outlook is a fall in oil prices which would lower exports and budgetary revenues, leading to an even sharper decline in reserves or higher public debt. Geopolitical tensions, the potential for social unrest in a context of weak public services and lack of progress in combatting corruption pose further risks.

Executive Board Assessment [2]

Executive Directors agreed with the thrust of the staff appraisal. They were encouraged by the recent strengthening of Iraq’s economy but recognized that the country continues to face daunting challenges. Social conditions remain harsh, post-war reconstruction progress is slow, development needs are large, and institutional weaknesses are significant. Volatile oil prices and a difficult regional and geopolitical environment pose additional difficulties. Directors encouraged the authorities to seize the opportunity presented by the improved security situation and higher oil prices to implement policies and structural reforms aimed at ensuring macroeconomic and financial stability, tackling long-standing social problems, and promoting sustainable and inclusive growth.

Directors emphasized that building a robust fiscal framework is essential to maintain fiscal and macroeconomic stability and strengthen buffers. They encouraged the authorities to adopt a risk‑ and rules-based approach to fiscal policy as part of broader reforms to manage oil revenue more effectively, reduce tendencies for procyclicality, and shift to a more growth-friendly composition of expenditure. Directors supported scaling up reconstruction and development expenditure gradually in line with improving absorptive capacity. They underscored the need to strengthen public financial management to ensure public spending is appropriately monitored and to reduce vulnerabilities to corruption. In this context, Directors welcomed the newly adopted General Financial Management Law and encouraged its full implementation.

Directors emphasized that gradual fiscal adjustment, including containing current primary spending and boosting non-oil revenues is essential for maintaining fiscal and debt sustainability. They recommended that spending measures should give priority to containing the growth in wage bill and lowering subsidies to the electricity sector. Directors emphasized that the poorest and the most vulnerable must be protected from the adjustment process.

Directors underscored that an overhaul of the banking sector is necessary to maintain financial stability. They encouraged the authorities to restructure the large state-owned banks, enhance their supervision, and implement other reforms to increase financial intermediation. Directors highlighted the benefits of increasing financial inclusion, especially for the SME sector, which has a large potential to absorb entrants to the labor market.

Directors agreed that building public institutions and enhancing governance is key for success, and highlighted the scope for Fund capacity development to support these efforts. They welcomed progress in developing an anti-corruption framework and called for further modifications to the legal regime for combatting corruption coupled with stronger coordination between the relevant government agencies, while continuing to strengthen the framework for Anti-money laundering and combatting the financing of terrorism (AML/CFT). Directors also recommended strengthening Public Investment Management framework to ensure that spending is well directed and that donor funds targeting reconstruction are put to the most efficient use.

Directors looked forward to continued close engagement between the authorities and the Fund in the context of post program monitoring.

 

Iraq: Selected Economic and Financial Indicators, 2015–24 (Percent of GDP, except were indicated)
											Projections
					2015		2016		2017	2018	2019	2020	2021	2022	2023	2024
Economic growth and prices
Real GDP (percentage change)					2.5		15.2		-2.5	-0.6	4.6	5.3	2.6	2.3	2.1	2.1
Non-oil real GDP (percentage change)					-14.4		1.3		-0.6	0.8	5.4	5.0	4.1	3.4	2.7	2.7
GDP deflator (percentage change)					-26.1		-13.4		14.6	15.4	-4.5	2.3	2.6	2.8	3.1	3.3
GDP per capita (US$)					5,047		4,843		5,263	5,882	5,728	6,017	6,172	6,326	6,486	6,666
GDP (in ID trillion)					207.2		206.7		231.0	265.0	264.8	285.4	300.4	315.9	332.3	350.4
Non-oil GDP (in ID trillion)					137.3		138.3		140.8	145.6	158.1	173.2	188.1	202.8	217.1	232.6
GDP (in US$ billion)					177.7		175.2		195.5	224.2	224.1	241.5	254.1	267.3	281.1	296.5
Oil production (mbpd)					3.72		4.63		4.47	4.41	4.59	4.84	4.93	5.01	5.10	5.18
Oil exports (mbpd)					3.35		3.79		3.80	3.86	4.03	4.25	4.33	4.40	4.47	4.55
Iraq oil export prices (US$ pb) 1/					45.9		35.6		48.7	65.2	56.0	55.8	54.9	54.4	54.4	54.8
Consumer price inflation (percentage change; end of period)					2.3		-1.5		0.2	-0.1	2.0	2.0	2.0	2.0	2.0	2.0
Consumer price inflation (percentage change; average)					1.4		0.5		0.1	0.4	0.8	2.0	2.0	2.0	2.0	2.0
National Accounts
Gross domestic investment					24.9		20.8		16.7	12.9	18.8	16.7	16.0	15.6	15.6	15.4
Of which: public					15.6		11.5		8.3	5.3	10.6	8.4	7.5	7.0	6.8	6.6
Gross domestic consumption					81.2		87.0		80.8	79.1	84.5	85.4	86.8	87.9	88.6	89.6
Of which: public					22.6		22.6		21.8	21.2	26.5	26.3	26.4	26.2	26.2	26.3
Gross national savings					18.4		12.5		18.6	19.8	13.6	12.5	11.7	11.1	10.3	9.4
Of which: public					3.1		-2.0		7.0	13.4	6.5	5.2	4.1	3.2	1.8	0.8
Saving - Investment balance					-6.5		-8.3		1.8	6.9	-5.2	-4.2	-4.3	-4.6	-5.3	-6.0
Public Finance
Government revenue and grants					30.6		26.8		33.0	39.8	40.5	39.6	37.9	36.5	35.5	34.6
Government oil revenue					27.8		22.9		28.9	36.7	37.2	36.3	34.5	33.1	32.0	31.0
Government non-oil revenue					2.8		4.0		4.2	3.1	3.3	3.3	3.4	3.4	3.5	3.5
Expenditure, of which:					43.4		40.7		34.6	32.0	44.6	43.1	41.2	40.5	40.5	40.5
Current expenditure					27.8		29.3		26.4	26.7	33.9	34.7	33.6	33.5	33.7	33.9
Capital expenditure					15.6		11.5		8.3	5.3	10.6	8.4	7.5	7.0	6.8	6.6
Overall fiscal balance (including grants)					-12.8		-13.9		-1.6	7.9	-4.1	-3.5	-3.3	-4.0	-5.0	-5.9
Non-oil primary fiscal balance, accrual basis (percent of non-oil GDP)					-46.5		-43.3		-39.4	-42.4	-56.9	-52.1	-49.2	-47.1	-46.2	-45.3
Adjusted Non-oil primary fiscal balance, accrual basis (excl. KRG, percent of non-oil GDP) 2/					-44.7		-43.3		-39.4	-40.5	-50.1	-46.0	-43.6	-41.8	-41.0	-40.2
Adjusted non-oil primary expenditure (excl. KRG, percent of non-oil GDP) 3/					48.9		49.2		46.3	46.2	55.6	51.5	49.1	47.2	46.3	45.5
Adjusted non-oil primary expenditure (excl. KRG, annual real growth, percent) 3/					-24.7		0.9		-4.5	2.8	29.9	-0.6	1.4	1.6	3.1	3.2
Memorandum items
Total government debt (in percent of GDP) 4/					56.2		64.2		58.9	49.3	51.4	50.5	50.6	51.5	53.6	56.4
Total government debt (in US$ billion) 4/					99.9		112.5		115.2	110.4	115.3	121.9	128.5	137.5	150.7	167.3
External government debt (in percent of GDP)					37.2		37.1		35.6	30.6	32.2	31.5	30.5	28.4	26.8	24.9
External government debt (in US$ billion)					66.1		65.0		69.5	68.7	72.2	76.2	77.6	75.8	75.3	73.8
Monetary indicators
Growth in reserve money					-12.0		9.2		-4.4	6.7	2.5	5.4	4.7	4.9	5.1	4.6
Growth in broad money					-9.1		7.1		2.6	2.7	2.5	6.2	5.4	6.0	5.9	5.3
External sector
Current account					-6.5		-8.3		1.8	6.9	-5.2	-4.2	-4.3	-4.6	-5.3	-6.0
Trade balance					-0.1		-1.7		7.6	13.4	3.5	4.1	3.2	2.0	1.3	0.5
Exports of goods					31.8		28.6		34.8	41.2	37.0	36.2	34.4	33.1	32.0	31.2
Imports of goods					-31.9		-30.3		-27.1	-27.8	-33.5	-32.0	-31.2	-31.1	-30.8	-30.7
Overall external balance					-6.7		-3.7		2.5	6.3	-2.5	-1.1	-1.6	-3.5	-3.8	-4.7
Gross reserves (in US$ billion)					54.1		45.5		49.4	64.7	57.2	53.5	48.5	38.8	28.2	14.3
Total GIR (in months of imports of goods and services)					9.3		7.8		7.3	8.0	6.8	6.2	5.5	4.2	2.9	1.4
Exchange rate (dinar per US$; period average)					1,166		1,180		1,182	1,182	1,182	1,182	1,182	1,182	1,182	1,182
Real effective exchange rate (percent change, end of period) 5/					6.5		1.8		-5.1	4.9	…	…	…	…	…	…
Sources: Iraqi authorities; and Fund staff estimates and projections. 1/ Negative price differential of about $3.6 per barrel compared to the average petroleum spot price (average of Brent, West Texas and Dubai oil prices) in 2018-23. 2/ Adjusted to exclude (i) full year estimates of federal government transfers to the Kurdistan Regional Government, and (ii) non-oil tax revenues from the KRG to the federal government. In 2014 and 2015, actual transfers were made for only 2 and 5 months, respectively. 3/ Adjusted to exclude full year estimate of federal government transfers to the Kurdistan Regional Government. In 2014 and 2015, actual transfers were made for only 2 and 5 months, respectively. 4/ Includes arrears. The debt stock includes legacy arrears to non-Paris Club creditors on which the authorities have requested (but not yet obtained) Paris-Club comparable relief. Implementing comparable terms will substantially reduce debt (e.g. by 15 percent of GDP in 2017). 5/ Positive means appreciation.

 

---

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here:http://www.imf.org/external/np/sec/misc/qualifiers.htm .

IMF Communications Department

MEDIA RELATIONS

PRESS OFFICER: WAFA AMR

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

 

https://www.imf.org/en/News/Articles/2019/07/26/pr19301-iraq-imf-executive-board-concludes-2019-article-iv-consultation-with-iraq

 

The OTHER two (2) can be accessed HERE:

 

Iraq : 2019 Article IV Consultation and Proposal for Post-Program Monitoring-Press Release; Staff Report; and Statement by the Executive Director for Iraq

 

Iraq : Selected Issues

 

https://www.imf.org/en/Countries/IRQ

 

You just need to scroll down on the last link until You see, "See ALL Documents".

 

Go Moola Nova!

[davis411]

Sorry 

I missed the term rv

but keep in mind my attention span to read such a long

 

is that a fly 

[Floridian]

@Synopsis, can you do a synopsis of the IMF report?

[10 YEARS LATER]

An overhaul of the Banking Sector is necessary to maintain financial stability ? Have not been reading they’ve had that for some time now and continue to make excellent inroads ? What the hell have they been doing all this time .... smoke maybe ?

Yet, they encourage full implementation of the Financial Management Law ?  I need to fire up the coffee ☕️ maker. 

 

10YL+6& .... and a wee bit confused.

[slb]

25 minutes ago, gregp said:

Directors looked forward to continued close engagement between the authorities and the Fund in the context of post program monitoring.

This is the best line. Cryptic bast@#$!

[Synopsis]

Just now, Floridian said:

@Synopsis, can you do a synopsis of the IMF report?

 

 Sure, Floridian, AND The Very Best Of Your Weekend To You!!! 

 

HERE is the Synopsis synopsis:

 

Blah, Blah, Blah ........................................ Blah, Blah, Blah ........................................ Blah, Blah, Blah ........................................ Yer ALL Rich NOW!!! ........................................ Blah, Blah, Blah ........................................ Blah, Blah, Blah ........................................ Blah, Blah, Blah ........................................

 

      

 

Well, OK, I did NOT read ALL the reports. I did skim through AND did some word searches. To NOTE:

• Reinstate OR Revalue did NOT appear.
• Bicraqi Iraqi Dinar vs. USD exchange rate is noted as 1,182 AND projected through 2024.
• Belt AND Road Initiative AND/OR Olde, er, NEW Silk Road did NOT appear AND WILL BE a significant source of income WITH pass through customs.
• Improvement, yes, doom AND gloom, certainly.

Overall, technical jargon AND formulas PERTAINING TO Iraq. MY (NOTE: MY) opinion is foreign investment AND THEE Olde, er, NEW Silk Road pass through customs WILL PUT THE Bicraqi Iraqi ON A WHOLE NEW HIGHER PLAYING FIELD LEVEL!!!

 

Conditions are FAR better NOW than in 2013 when Dr. Shabibi was working on ReInstating THEE Bicraqi Iraqi Dinar INTERNATIONALLY INSIDE AND OUTSIDE Iraq. Iraq is by far becoming recognized as a Sovereign State AND being treated as such. Sure, a few lingering issues but these were IN Iraq in 2013, too.

 

Iya dunno what the REAL triggers are but it looks like the right ones are being pulled on the way to !!!SUDDENLY!!!!!!

 

So, OK, I did NOT thoroughly read the three (3) posted articles since I am in a "kinder" AND "gentler" "treatment" "mode" FOR MY (NOTE: MY) brain. Reading THOSE articles ALL THE WAY THROUGH WILL KILL ANYONE'S BRAIN!!!

 

CAVEAT EMPTOR!!!

 

      

 

In The Mean Time..............................................................................................

 

The "Standard" "Disclaimer" Applies................................................................

 

AND (of course)................................................................................................

 

Go Moola Nova (YEAH AND YEE HAW, BABY, READY WHEN YOU ARE BROTHER (OR SISTER) - LET 'ER BUCK!!!)!!!

   

[Floridian]

8 minutes ago, Synopsis said:

 

• Bicraqi Iraqi Dinar vs. USD exchange rate is noted as 1,182 AND projected through 2024.

 

 

 

Thanks, Synopsis.

 

Very disheartening to read that they wrote the 1182 exchange rate is projected through 2024.

This was the report we were all waiting for and it turns out to be a disappointment.  ☹️

 

[fancy]

Hang on!  They can't reveal to the world in this report that the exchange rate has changed.  I'd blow this whole thing up. Don't give up hope yet.  

[Synopsis]

4 minutes ago, Floridian said:

Thanks, Synopsis.

 

Very disheartening to read that they wrote the 1182 exchange rate is projected through 2024.

This was the report we were all waiting for and it turns out to be a disappointment.  ☹️

 

 

 NOT Necessarily, Floridian, AND ALL The Very Best!!! 

 

I could NOT imagine the IMF OR ANY AGENCY noting exchange rate changes to AVOID MASSIVE speculation to dilute the Bicraqi Iraqi Dinar INTERNATIONAL RATE CHANGE DUE TO ELECTRONIC SPECULATION!!!

 

Unfortunately, WE ALL are IN a "wait" AND "see" "mode" ANTICIPATING !!!SUDDENLY!!!!!!

 

In The Mean Time....................................................................................

 

The "Standard" "Disclaimer" Applies.......................................................

 

AND (of course)........................................................................................

 

Go Moola Nova (YEAH AND YEE HAW, BABY, READY WHEN YOU ARE BROTHER (OR SISTER) - LET 'ER BUCK!!!)!!!

   

[Floridian]

1 minute ago, Synopsis said:

 

 NOT Necessarily, Floridian, AND ALL The Very Best!!! 

 

I could NOT imagine the IMF OR ANY AGENCY noting exchange rate changes to AVOID MASSIVE speculation to dilute the Bicraqi Iraqi Dinar INTERNATIONAL RATE CHANGE DUE TO ELECTRONIC SPECULATION!!!

 

Unfortunately, WE ALL are IN a "wait" AND "see" "mode" ANTICIPATING !!!SUDDENLY!!!!!!

 

In The Mean Time....................................................................................

 

The "Standard" "Disclaimer" Applies.......................................................

 

AND (of course)........................................................................................

 

Go Moola Nova (YEAH AND YEE HAW, BABY, READY WHEN YOU ARE BROTHER (OR SISTER) - LET 'ER BUCK!!!)!!!

   

 

Thanks, Synopsis, but it's just so aggravating that the IMF says the rate of 1182 is projected through 2024.  That's another 5 years.

They could have said nothing about "rate projections" instead of putting in a date.  

 

[miquel]

3 minutes ago, Floridian said:

 

Thanks, Synopsis, but it's just so aggravating that the IMF says the rate of 1182 is projected through 2024.  That's another 5 years.

They could have said nothing about "rate projections" instead of putting in a date.  

 

But what better way to throw off speculators? What the IMF said makes perfect sense if they want to keep people guessing or discouraged about this 

[Floridian]

11 minutes ago, miquel said:

But what better way to throw off speculators? What the IMF said makes perfect sense if they want to keep people guessing or discouraged about this 

 

Just how many "speculators" would there be?

If people even mention "the Dinar" to others, they are laughed at.

Some of us have been in this thing 16 years and are still waiting.  I'm going on 10 years myself.

Nothing but disappointment after disappointment.

We constantly build ourselves up for a letdown.

We wait for one thing after the other, "This is it!  "This is it!"  And then, nothing!

 

Sorry, I'm venting.  I guess I should shut up now.

[ChuckFinley]

1 hour ago, 10 YEARS LATER said:

An overhaul of the Banking Sector is necessary to maintain financial stability ? Have not been reading they’ve had that for some time now and continue to make excellent inroads ? What the hell have they been doing all this time .... smoke maybe ?

Yet, they encourage full implementation of the Financial Management Law ?  I need to fire up the coffee ☕️ maker. 

 

10YL+6& .... and a wee bit confused.

I just getting in here but didn't they just win a ton of awards?

[ChuckFinley]

I am going back to try to find it, but someone may have the answer.

Are they Art 8?  

[ChuckFinley]

Have to jump off. My FRIGGIN boss is disturbing my exit strategy. 

[Laid Back]

I found interesting that they don’t mention couple of important things. Like they did in the first and second review.

 

- Maintaining the peg of the Iraqi dinar to the U.S. dollar, which provides a key anchor to the economy.

 

- No a word about Exchange rate restrictions subject to Art VIII.

 

“something is going on”

 

Go RV sooner than later 

Go $1:1

 

 

 

 

[Artitech]

Well for the record, this is not the first time, I have heard the 2024 date mentioned! It just disheartening to say the least! Like I say I’m riding this horse till it dies or I do whichever comes 1st!🤠

[showell83]

It says post program monitoring recommendation from IMF.  Wouldn't that mean they are transitioning out of Art IV? 

[Floridian]

38 minutes ago, ChuckFinley said:

I am going back to try to find it, but someone may have the answer.

Are they Art 8?  

 

Nope!

 

[Miamiheatnic]

Totally agree that they aren't going to say anything in their "projections" to give even the slightest clue or hint at something big that is going to happen...This is by design to throw you off because there no way they want more people going to buying dinar...Hold on and laid back, you're right, something is going on.

[gregp]

1 hour ago, Laid Back said:

I found interesting that they don’t mention couple of important things. Like they did in the first and second review.

 

- Maintaining the peg of the Iraqi dinar to the U.S. dollar, which provides a key anchor to the economy.

 

- No a word about Exchange rate restrictions subject to Art VIII.

 

“something is going on”

 

Go RV sooner than later 

Go $1:1

 

 

 

 

 

What the dude in the banana hammock said.