Washington (United States) (AFP) – The International Monetary Fund on Thursday said it was engaging with Iraqi authorities as it prepares a new bailout program for the country, whose economy has been battered by the war on Iran. The US-Israel war on Iran, launched in late February, plunged the region into conflict and saw Tehran’s retaliatory action virtually block the Strait of Hormuz, a key energy supply route. Iraq’s economy is heavily dependent on its energy exports, which almost entirely rely on transport through the strait.
Before the war, the country was already facing acute fiscal constraints, and the IMF this month forecast its economy would contract by 16 percent this year. “Our plan now is to engage with the authorities to understand better their priorities, how they want to address their vulnerabilities, and then to move ahead on how we can best support them with a program,” said IMF spokesperson Julie Kozack at a regular press briefing in Washington.
Kozack cited the country’s severe financing constraints from before the outbreak of the war, and said its very narrow non-oil revenue base was also putting pressure on the fiscal balance. The last of Iraq’s three most recent programs with the IMF ended in 2019. It has a total of around $428 million in interest payments due to the Fund by 2030, according to IMF data.
IMF Chief Kristalina Georgieva first disclosed that Iraq had approached the Fund for a new program at the Fund’s annual meetings in Bangkok earlier this month. At those meetings, Georgieva lauded the resilience of global economic growth in the face of wars in Iran and Ukraine, but warned that outcomes were highly uneven with more vulnerable economies battered hard by the conflicts.
© 2024 AFP
