Tuesday, March 13, 2007
IMF extends $714 million loan
Finance
(Reuters) The International Monetary Fund on Tuesday extended Iraq's $714.7 million loan accord to Sept. 28 at the government's request and said the country faced an important juncture in its economic recovery amid increased violence. Iraq has treated the loan as precautionary finance and has not drawn down on it since its approval in December 2005.
"Despite very difficult political and security circumstances, the Iraqi authorities have taken important measures to keep their economic program on track," IMF Deputy managing Director Takatoshi Kato said in a statement. He commended the authorities for their management of the economy, including maintaining fiscal discipline, tightening monetary policy and raising domestic fuel prices.
But the IMF said inflation was high and the central bank may need to act to prevent it from becoming entrenched, while fiscal policy should keep current spending in check, including wages and pensions. Kato urged the government to increase its investment, especially in the oil sector, and to reduce supply constraints of fuel products. "To that end, actions are needed to facilitate the importing of fuel products by the private sector," Kato said. He said reforms needed to be broadened, including in the budget and financial management system. The fund praised restructuring efforts of Iraq's two largest banks but said more efforts were needed to overhaul the four other state-owned banks.
"Despite very difficult political and security circumstances, the Iraqi authorities have taken important measures to keep their economic program on track," IMF Deputy managing Director Takatoshi Kato said in a statement. He commended the authorities for their management of the economy, including maintaining fiscal discipline, tightening monetary policy and raising domestic fuel prices.
But the IMF said inflation was high and the central bank may need to act to prevent it from becoming entrenched, while fiscal policy should keep current spending in check, including wages and pensions. Kato urged the government to increase its investment, especially in the oil sector, and to reduce supply constraints of fuel products. "To that end, actions are needed to facilitate the importing of fuel products by the private sector," Kato said. He said reforms needed to be broadened, including in the budget and financial management system. The fund praised restructuring efforts of Iraq's two largest banks but said more efforts were needed to overhaul the four other state-owned banks.
