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Iraq's Central Bank Predicts 10% Economic Growth for 2006
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Zawya.com - [1/6/2006]
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Iraq is expected to achieve 10% of economic growth in 2006, Iraq's central bank governor, Sinan Al-Shibibi, announced during a press conference in Baghdad.
"Average inflation will decrease to 15% and net foreign currency reserves will grow by around $8.7 billion," Shibili said according to a report published on Thursday by the London-based Al Hayat daily.
Estimates put Iraq's economic growth this year at 2.6%.
The governor added that the Iraq's budget deficit is expected to decrease to 8% of gross national product (GDP) in the next fiscal year down from 11% in 2005.
"We are working to eliminate the budget deficit in the next few years," Shibibi said.
Shibibi also confirmed that the executive board of the International Monetary Fund (IMF) approved a stand-by financing arrangement designed to support the country's economic program for 2006.
The IMF arrangement, for an amount of about $685 million, should allow Iraqi authorities over the next 15 months to improve governance structures, expand the oil sector, and direct resources away from subsidies, said an IMF press release on December 23.
The stand-by arrangement is the second IMF support measure for Iraq since the end of fighting in 2003. The first had come in September 2004 as $436.3 million loan for emergency post-conflict assistance.
The new IMF stand-by arrangement, which is based on Iraq's expectations for economic growth and inflation reduction, was a precondition for implementing the next stage in debt-reduction agreements between Iraq and creditor nations in the Paris Club, an informal organization of 19 countries with huge receivables from indebted nations.
In recent weeks, Japan and several European countries thus signed debt-reduction agreements with Iraq, implementing a decision taken by the Paris Club in November 2004 for cancelling 80% of a total $39 billion in debt owed by Iraq to the Paris Club countries.
In a separate development, the CEO of Iraq's Stock Exchange (ISX), Taha Ahmed Abdul Salam, said that the country's security problems and lack of foreign investments had weakened the stock market this year.
Salam announced that the exchange achieved a trade volume of over 55.639 billion shares in 2005, with the value of trading amounting to ID 366.809 billion ($250 billion), the London-based Arabic daily Al Hayat reported on Thursday.
"This volume of trading could have been significantly higher had there been more conducive market conditions such more security and better legislation to encourage foreign investment in Iraq," Salam was quoted as saying.
He expressed disappointment over the Iraqi government's hesitation to implement a decision allowing foreigners to trade on the ISX. "We don't understand the reasons behind the delay to implement the decision, which was taken at the beginning of this year, regarding foreign investment in the ISX," he said.
Salam added that ISX, which recently relocated to a new location, would introduce electronic trading at the beginning of 2006. [TS]
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