The International Monetary Fund issues a pessimistic statement about the Iraqi economy

by **Rocky** Thu 01 Jun 2023, 4:57 am

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Post n°1

The International Monetary Fund issues a pessimistic statement about the Iraqi economy

by Rocky Thu 01 Jun 2023, 4:57 am

The International Monetary Fund issues a pessimistic statement about the Iraqi economy

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Economy News _ Baghdad

The International Monetary Fund issued a pessimistic statement for the Iraqi economy after the post-pandemic recovery last year, including reasons related to the interruption of the Kirkuk-Ceyhan oil pipeline and OPEC cuts.

A number of fund experts who met with Iraq in Jordan from May 24 to 31 last to discuss with the Iraqi authorities about recent economic developments and expectations as well as policy plans in the coming period, said that "the growth momentum of the Iraqi economy has slowed in recent months, after recovering to a level before Pandemic last year, oil production is set to contract by 5 percent in 2023 due to OPEC+ production cuts, Kirkuk-Ceyhan oil pipeline outage, foreign exchange market volatility in the wake of tightening AML/CFT controls by The Central Bank of Iraq on foreign currency sales negatively.

And they indicated, "It is estimated that the non-oil real GDP contracted by 9 percent (on an annual basis) in the last quarter of the year 2022, which cancels its growth during the previous three quarters, with the continued stability of the foreign exchange market, with the help of the measures of the Central Bank." In Iraq, non-oil real GDP growth is expected to resume and reach 3.7 percent in 2023, after rising to 7 percent in January,” and inflation has begun to moderate — reflecting a decline in international goods as well as a revaluation of 10 percent to the dinar - and it is expected that the average inflation will reach 5.6 percent in 2023.

The experts also pointed out that "favorable conditions in the oil market supported Iraq's financial and external situation, but the structural imbalances continued to widen. In the year 2022, current account surpluses in public and external finances reached 7.6 and 17.3 percent of GDP, respectively, on the back of revenues record high oil,” and the CBI’s foreign exchange reserves rose to US$97 billion (11 months of imports), including US$16.3 billion (6 percent of GDP) in fiscal savings accumulated by the government. At the same time, a significant fiscal expansion widened the non-oil primary deficit from 52% to more than 68% of non-oil GDP during the year 2022.

They pointed out that "the largest fiscal easing envisaged in the draft budget law of 2023 would widen the primary non-oil fiscal deficit to 75% of non-oil GDP and bring the total fiscal balance to a deficit of 6.5% of GDP, and the combined effects will lead to Increased government spending, a revaluation of the exchange rate, and lower oil production have pushed the fiscal breakeven price of oil to $96 a barrel.

Experts said, "In the short term, the implementation of the authorities' financial plans could lead to a re-ignition of inflation and fluctuations in the foreign exchange market, and in the medium term, the continuation of current policies in the presence of a great deal of uncertainty about the future course of oil prices poses critical risks to the stability of the economy." Aggregate, if there is no significant increase in oil prices, the current fiscal situation may lead to widening deficits and intensifying financing pressures in the coming years.

And they stressed that "a tougher fiscal policy is needed to enhance flexibility and reduce the government's dependence on oil revenues while protecting critical social spending needs." Government plan to increase social assistance, the mission recommends stronger targeting to ensure it is directed at the most vulnerable people.

They noted that "improving public financial management remains of paramount importance, and in this context, the mission warns against the planned creation of new extra-budgetary funds, which raises concerns about governance and efficiency, and strongly recommends adherence to budgeted government expenditures. Moreover, the mission urges "Full implementation of the Government Guarantees Management Framework, including Parliamentary Guarantees. Endorsement and publication of an annual cap and list of Government Guarantees as part of the Budget Law. Accelerated efforts are also needed to establish the Treasury Single Account to strengthen public financial management."

At the same time, the mission welcomed "the progress made by the Central Bank of Iraq in improving liquidity management and frameworks for combating money laundering and terrorist financing, and stresses the importance of close alignment of the position of fiscal and monetary policies in managing the economy."

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by **Rocky** Thu 01 Jun 2023, 5:05 am

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Post n°2

The International Monetary Fund issues a pessimistic statement about the Iraqi economy

by Rocky Thu 01 Jun 2023, 5:05 am

The International Monetary Fund issues a pessimistic statement about the Iraqi economy

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2023-06-01 01:10
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Shafaq News/ The International Monetary Fund issued a pessimistic statement for the Iraqi economy after the post-pandemic recovery last year, including reasons related to the interruption of the Kirkuk-Ceyhan oil pipeline and OPEC cuts.
A number of fund experts who met with Iraq in Jordan from May 24 to 31 last to discuss with the Iraqi authorities about recent economic developments and expectations as well as policy plans in the coming period, said that "the growth momentum of the Iraqi economy has slowed in recent months, after recovering to a level before Pandemic last year, oil production is set to contract by 5 percent in 2023 due to OPEC+ production cuts, Kirkuk-Ceyhan oil pipeline outage, foreign exchange market volatility in the wake of tightening AML/CFT controls by The Central Bank of Iraq on foreign currency sales negatively.

And they indicated, "It is estimated that the non-oil real GDP contracted by 9 percent (on an annual basis) in the last quarter of the year 2022, which cancels its growth during the previous three quarters, with the continued stability of the foreign exchange market, with the help of the measures of the Central Bank." In Iraq, non-oil real GDP growth is expected to resume and reach 3.7 percent in 2023, after rising to 7 percent in January,” and inflation has begun to moderate — reflecting a decline in international goods as well as a revaluation of 10 percent to the dinar - and it is expected that the average inflation will reach 5.6 percent in 2023.
The experts also pointed out that "favorable conditions in the oil market supported Iraq's financial and external situation, but the structural imbalances continued to widen. In the year 2022, current account surpluses in public and external finances reached 7.6 and 17.3 percent of GDP, respectively, on the back of revenues record high oil,” and the CBI’s foreign exchange reserves rose to US$97 billion (11 months of imports), including US$16.3 billion (6 percent of GDP) in fiscal savings accumulated by the government. At the same time, a significant fiscal expansion widened the non-oil primary deficit from 52% to more than 68% of non-oil GDP during the year 2022.
They pointed out that "the largest fiscal easing envisaged in the draft budget law of 2023 would widen the primary non-oil fiscal deficit to 75% of non-oil GDP and bring the total fiscal balance to a deficit of 6.5% of GDP, and the combined effects will lead to Increased government spending, a revaluation of the exchange rate, and lower oil production have pushed the fiscal breakeven price of oil to $96 a barrel.
Experts said, "In the short term, the implementation of the authorities' financial plans could lead to a re-ignition of inflation and fluctuations in the foreign exchange market, and in the medium term, the continuation of current policies in the presence of a great deal of uncertainty about the future course of oil prices poses critical risks to the stability of the economy." Aggregate, if there is no significant increase in oil prices, the current fiscal situation may lead to widening deficits and intensifying financing pressures in the coming years.
And they stressed that "a tougher fiscal policy is needed to enhance flexibility and reduce the government's dependence on oil revenues while protecting critical social spending needs." Government plan to increase social assistance, the mission recommends stronger targeting to ensure it is directed at the most vulnerable people.
They noted that "improving public financial management remains of paramount importance, and in this context, the mission warns against the planned creation of new extra-budgetary funds, which raises concerns about governance and efficiency, and strongly recommends adherence to budgeted government expenditures. Moreover, the mission urges "Full implementation of the Government Guarantees Management Framework, including Parliamentary Guarantees. Endorsement and publication of an annual cap and list of Government Guarantees as part of the Budget Law. Accelerated efforts are also needed to establish the Treasury Single Account to strengthen public financial management."
At the same time, the mission welcomed "the progress made by the Central Bank of Iraq in improving liquidity management and frameworks for combating money laundering and terrorist financing, and stresses the importance of close alignment of the position of fiscal and monetary policies in managing the economy."
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by **Rocky** Thu 01 Jun 2023, 5:07 am

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Post n°3

A report from the International Monetary Authority on the Iraqi economy

by Rocky Thu 01 Jun 2023, 5:07 am

[size=45][size=41]A report from the International Monetary Authority on the Iraqi economy[/size]
1 hour ago
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Today, Thursday, the International Monetary Fund issued warnings about the Iraqi economy in the coming period, while predicting a rise in the dollar.
A statement by the Fund stated, “A team of International Monetary Fund experts, led by Tukhir Mirzoev, visited Amman, Jordan, during the period from 24 to 31 May, with the aim of discussing the latest developments and economic prospects with the Iraqi authorities, in addition to discussing related plans.” policies in the coming period.
The head of the fund’s expert team said, according to the statement: “The growth momentum of the Iraqi economy has slowed in recent months. After oil production recovered last year and restored to the level it reached before the outbreak of the Corona pandemic, production is expected to contract by 5 percent in the year 2023 in In light of the decision of OPEC + to reduce the volume of oil production, and the interruption of the Kirkuk-Ceyhan oil pipeline from work. The fluctuations in the foreign exchange market, following the application of the Central Bank of Iraq to more stringent controls to combat money laundering and terrorist financing on foreign currency sales, had a negative impact on the import-based non-oil sectors.
He added, "It is estimated that the non-oil real GDP contracted by 9 percent (on a comparative annual basis) during the last quarter of 2022, which canceled the growth achieved during the first three quarters of the year."
And he continued: “With signs of stabilization of the foreign exchange market, in light of the measures taken by the Central Bank of Iraq, the real non-oil GDP is expected to resume growth, reaching 3.7 percent in 2023. And after the inflation rate rose to 7 percent. In the month of January, inflation began to moderate in a way that reflects the decline in commodity prices at the international level and the increase in the exchange rate of the Iraqi dinar by 10 percent. The inflation rate is expected to average 5.6 percent during the year 2023.
And between Mirzoev: “Favorable conditions in the oil market have supported the financial and external centers of Iraq, but the structural imbalances have continued to widen. GDP, respectively, due to the record rise in oil revenues.
And he added: “The foreign currency reserves of the Central Bank of Iraq also increased to reach 97 billion US dollars (equivalent to the value of 11 months of import), which includes financial savings for the government amounting to 16.3 billion US dollars (equivalent to 6 percent of the output). gross domestic). At the same time, the significant expansion of public finances increased the non-oil primary deficit from 52 percent to more than 68 percent of non-oil GDP during the year 2022.
He pointed out that “fiscal expansion will further increase, according to what is proposed in the draft budget law for the year 2023, the size of the non-oil primary deficit in public finances to reach 75 percent of non-oil GDP, and the total deficit in the balance of public finances.” to 6.5 percent of the gross domestic product. The combined effects of increasing government spending, increasing the exchange rate of the Iraqi dinar, and reducing oil production combined, would increase the price of a barrel of oil required to achieve balance (zero deficit) in public finances, to 96 US dollars.
He explained, "In the short term, the implementation of the Iraqi authorities' plans for public finances could push the inflation rate up, and return the foreign exchange market to volatility."
He added, “In the medium term, the continuation of the current policies in light of a great deal of uncertainty about the future path of oil prices poses serious risks to the stability of the macroeconomic system. Except in the case of a significant increase in oil prices, the current fiscal situation could lead to an escalation of the deficit and the tightening of fiscal pressures in the coming years.
He pointed out, “There is a need for a more tightening public finance policy, in order to strengthen the resilience of the economy and reduce the government’s dependence on oil revenues while preserving urgent social spending needs. Key priorities include diversifying fiscal revenues, reducing the huge wage bill for government employees, and reforming the pension system to make it fiscally sound and more inclusive.”
"Although the IMF mission supports the government's plan to increase the volume of social assistance, it recommends a stronger level of targeting, in order to ensure that aid is directed to the most vulnerable citizens," Mirzoev said.
He stressed, “Improving public financial management remains of great importance. In this context, the IMF mission warns of the need to be cautious about the planned establishment of new funds outside the budget framework, which raises concerns about governance and efficiency, and the mission strongly recommends commitment to All government expenditures are through the budget.
And he indicated, “The mission urges the full implementation of the framework for managing government guarantees, including obtaining Parliament’s prior approval on the annual ceiling and on the list of government guarantees as part of the budget law.” In addition, there is a need to accelerate efforts to establish the single treasury account with the aim of strengthening public financial management.
He pointed out, “The mission welcomes the progress made by the Central Bank of Iraq in the field of improving liquidity management, and frameworks for combating money laundering and combating terrorist financing, and stresses the importance of close coordination between the positions of monetary and public financial policies in managing the Iraqi economy.”
And he stressed, “Creating an enabling environment for the development of the private sector will be of paramount importance, in order to achieve sustainable and more inclusive growth for all. Priorities in this area include continuing efforts to strengthen governance and reduce corruption, restructuring large state-owned banks to improve access to finance, reforming the labor market to boost private sector job creation, and improving the electricity sector's ability to recover costs to enhance its ability to meet demand in a sustainable manner. and improving the broader work environment.
Mirzoev concluded, "The Fund's team of experts stands ready to support the Iraqi authorities in their reform efforts, and would like to thank them for the frank and fruitful discussions during the mission."
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by **Rocky** Fri 02 Jun 2023, 4:19 am

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Post n°4

In detail.. The International Monetary Fund issues its report on the Iraqi economy and issues a numb

by Rocky Fri 02 Jun 2023, 4:19 am

In detail.. The International Monetary Fund issues its report on the Iraqi economy and issues a number of warnings

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A team of International Monetary Fund experts, led by Tukhir Mirzoev, warned that the fluctuations in the foreign exchange market and the reduction in oil production affected the momentum of growth in Iraq, warning of the expansionary plans of the Iraqi authorities in public finances that could lead to an exacerbation of the level of inflation. In the short term, and to impose significant risks to macroeconomic stability in the medium term.

And he considered, in a report issued by the Fund, that the discipline of public finances and wide-ranging structural reforms are crucial factors to reduce weaknesses in the Iraqi economy, to enhance its resilience in the face of crises, and to achieve sustainable and more inclusive growth for all.

The report comes after a visit to Amman, Jordan, during the period 24-31 May, with the aim of discussing the latest developments and economic prospects with the Iraqi authorities, as well as discussing plans related to policies in the coming period.

At the end of this mission, Mirzoev issued the following statement:

"The growth momentum of the Iraqi economy has slowed down in recent months. After recovering oil production last year and restoring the level it reached before the outbreak of the Corona pandemic, production is expected to contract by 5 percent in 2023 in light of OPEC +'s decision to reduce the volume of oil production." , and the interruption of the Kirkuk-Ceyhan oil pipeline from work.The fluctuations in the foreign exchange market rates, following the application of the Central Bank of Iraq to stricter controls to combat money laundering and terrorist financing on foreign currency sales, had a negative impact on the import-based non-oil sectors. A contraction in real non-oil GDP by 9 percent (on a year-on-year basis) during the last quarter of 2022, canceling the growth achieved during the first three quarters of the year.With signs of stabilization of the foreign exchange market, in light of the measures taken by the Central Bank of Iraq, the non-oil real GDP is expected to resume growth, reaching 3.7 percent in 2023. After the inflation rate rose to 7 percent in January On the second of January, inflation began to moderate in a way that reflects the decline in commodity prices at the international level and the increase in the exchange rate of the Iraqi dinar by 10 percent. The inflation rate is expected to average 5.6 percent during the year 2023.

"Favorable conditions in the oil market have supported Iraq's financial and external centers, but the structural imbalances have continued to widen. In the year 2022, surpluses in public finance and external current account balances amounted to 7.6, or 17.3 percent of the total GDP, Respectively, due to the record rise in oil revenues, the foreign exchange reserves of the Central Bank of Iraq increased to reach 97 billion US dollars (equivalent to the value of 11 months of import), which includes financial savings for the government amounting to 16.3 billion US dollars ( At the same time, the significant expansion of public finances has increased the non-oil primary deficit from 52 percent to over 68 percent of non-oil GDP in 2022.

“The fiscal expansion will further increase, as proposed in the draft budget law for the year 2023, the size of the primary non-oil deficit in public finances to reach 75 percent of non-oil GDP, and the total deficit in the balance of public finances to 6 percent. 5 percent of GDP.The combined effects of the increase in government spending, the increase in the exchange rate of the Iraqi dinar, and the decrease in oil production combined would increase the price of a barrel of oil required to achieve balance (zero deficit) in public finances, to 96 US dollars.

"In the short term, the implementation of the Iraqi authorities' plans for public finances could push the inflation rate upward, and return the foreign exchange market to volatility. As for the medium term, the continuation of the current policies in light of a great deal of uncertainty about the path of Oil prices in the future pose serious risks to macroeconomic stability, and except in the case of a significant increase in oil prices, the current public finance situation could lead to an escalation of the deficit and an increase in fiscal pressures in the coming years.

A tighter fiscal policy is needed to strengthen the resilience of the economy and reduce the government's dependence on oil revenues while preserving urgent social spending needs. Key priorities include diversifying fiscal revenues, reducing the huge wage bill for government employees, and reforming the pension system To make it financially sound and more inclusive.While the IMF mission supports the government's plan to increase the volume of social assistance, it recommends a stronger level of targeting, to ensure that aid is directed to the most vulnerable citizens.

“Improving public financial management remains critical. In this context, the IMF mission warns of the need to be cautious about planned creation of new extra-budgetary funds, which raises concerns about governance and efficiency, and strongly recommends that all Government expenditures through the budget.Furthermore, the mission is urging full implementation of the Government Guarantees Management Framework, including taking parliamentary pre-approval of the annual ceiling and the list of government guarantees as part of the budget law.In addition, there is a need to accelerate efforts to Establishing the single treasury account with the aim of strengthening public financial management.

The mission welcomes the progress made by the Central Bank of Iraq in the area of improving liquidity management, anti-money laundering and counter-terrorist financing frameworks, and stresses the importance of close coordination between the stances of monetary and public financial policies in managing the Iraqi economy.

“Creating an enabling environment for private sector development will be paramount to achieving sustainable and more inclusive growth. Priorities in this area include continued efforts to strengthen governance and reduce corruption, restructure large state-owned banks to improve access to finance, and reform the labor market with the aim of promoting job creation. Employment in the private sector, improving the ability of the electricity sector to recover costs to enhance its ability to meet demand in a sustainable manner, and improving the broader business environment.

The Fund's team of experts stands ready to support the Iraqi authorities in their reform efforts, and would like to thank them for the frank and fruitful discussions during the mission.

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by **Rocky** Fri 02 Jun 2023, 4:48 am

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Post n°5

International Monetary: The Slowdown In The Momentum Of Economic Growth In Iraq Due To The Drop In O

by Rocky Fri 02 Jun 2023, 4:48 am

International Monetary: The Slowdown In The Momentum Of Economic Growth In Iraq Due To The Drop In Oil Prices
01/06/2023
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Earth News / A group of experts from the International Monetary Fund issued, after their visit to the Jordanian capital, Amman, last week, an analytical paper on the economic situation in Iraq.
The Fund published on its website an article stating: “A team of International Monetary Fund experts, led by Tokhir Mirzoev, visited Amman, Jordan, during the period 24-31 May, with the aim of discussing the latest developments and economic prospects with the Iraqi authorities, as well as discussing Plans related to policies in the coming period.
He added: “The growth momentum of the Iraqi economy has slowed down in recent months. After oil production recovered last year and restored to the level it reached before the outbreak of the Corona pandemic, production is expected to contract by 5 percent in the year 2023 in light of the decision of OPEC + to reduce the volume of production.” Oil production, and the interruption of the Kirkuk-Ceyhan oil pipeline from work.
He pointed out that “the fluctuations in the market of foreign exchange rates following the application of the Central Bank of Iraq to more stringent controls to combat money laundering and terrorist financing on foreign currency sales had a negative impact on the import-based non-oil sectors.”
And he continued: “It is estimated that the non-oil real GDP contracted by 9 percent (on a comparative annual basis) during the last quarter of the year 2022, which canceled the growth achieved during the first three quarters of the year. With signs of stabilization of the foreign exchange market, in light of the measures taken by the Central Bank of Iraq, the non-oil real GDP is expected to resume growth, reaching 3.7 percent in 2023.
After the inflation rate rose to 7 percent in January, inflation began to moderate in a way that reflects the decline in commodity prices at the international level and the increase in the Iraqi dinar exchange rate by 10 percent. The inflation rate is expected to average 5.6 percent during in 2023».
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The International Monetary Fund issues a pessimistic statement about the Iraqi economy

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A report from the International Monetary Authority on the Iraqi economy

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