It has been predicted by International Monetary Fund that Iraq will achieve a steep 9 percent growth in this current economic year. A report has been issued from IMF on this regarded, illustrating Iraq’s rise in oil export will contribute heavily in the growth of the country.
The report was issued after the consultative meetings held between representatives of the Fund and the Iraqi side in March of this year.
In an interview, the head of the IMF mission to Iraq Carlo Sidr Allweg, stated, “The work was done primarily through the programs of the International Monetary Fund (IMF) official, which also included financial and technical assistance. It has provided those programs framework to help the Iraqi government and the Iraqi Central Bank on the application of sound policies, especially public finances of the state, and to contain inflation, and maintain a fixed price for the Iraqi dinar exchange (strong and stable) and the restructuring of external debt Iraqi successfully.”
This control features a relatively new relationship between Iraq and IMF. He further added, “Because we – the IMF – we were and still working with Iraq since 2004. The report issued by the major recommendations emphasizes the importance of take-makers policies Iraqis stand initiatives further towards addressing many of the challenges facing Iraq, in order to realize the potential of Iraq’s enormous economic entirety, and dissemination of the benefits of economic growth to the general population.”
The report also includes five policy recommendations for Iraq, which will bring economic boom in Iraq and will provide the steady economic sustainability to the nation. There are a large portion of people reside in Iraq, who can be marked as the people of below poverty level. Thus, Mr. Carlo Sidr Allweg stated, “First sustainable budgets the government should focus on developing sustainable budgets can finance public spending of the proceeds of oil revenues. But because government spending is the main channel of the shocks coming from the international oil market, the construction of public financial reserves, which can fortify the spending of declines in oil exports or in the price of oil, is crucial as well.”
He further added,” The government owns these reserves are actually in the Development Fund for Iraq (a type of bank accounts that spared to meet the need in the future), but the government should also increase the value of those reserves, raise the quality of spending and between it’s also important to contain the growth in public spending to avoid significant gaps in the budget in the future, in addition to reducing wasteful spending as well. We appreciate the special role played by the public sector in Iraq, but we still see room for continuing to play this role, for example, by reducing the growth of employment / employment in the public sector, and reduce subsidies to the electric power sector, and reform of the public distribution system, owned and state-owned companies to the state.”
In addition to building reserves of public finances, Iraq can use the savings to upgrade the quality of social spending quality, and public investment in infrastructure. editing the foreign exchange market either second recommendation, it had to be on the central bank to accelerate the pace of liberalization foreign exchange market, knowing that he had already begun so in recent times.
He served the country with its exchange stability, few years back. That was a nominal effort but was very significant. Iraqi Central Bank had introduced a number of restrictive regulations intense in the last two years in response to concerns that Sawrth on money laundering and foreign exchange flows of illegal out of Iraq.
He stated that in their view these regulations quoted a great deal of legitimate demand for foreign currencies to the parallel market, and as a result, it increased the difference between the price the official exchange rate and parallel, reaching 8 per cent in the month of April. The third recommendation is supporting the value of Iraqi dinar. For this, it is important for the Central Bank of Iraq to exercise prudent management of Iraq’s foreign currency reserves.
The autonomous feature of Central Bank of Iraq has been supported by the IMF. The bank should take financial measure and should increase its foreign reserves without any political guidance. This is truly important for the future finance and economic sector of Iraq.
He remarked, “We also believe that it is also important to maintain the separation between the current international reserves, which are managed automatically from the central bank alone, and between public financial reserves, which are controlled by the government, and in the Development Fund for Iraq.”
But the financial system in Iraq is still too late to grow more dangerous, in the presence of levels of deposit, credit, much lower than the averages of the deposit and credit in the Middle East and North Africa.
The final recommendation came out a little bit about our basic framework, but is gaining critical to economic growth in Iraq.
According to his statement, “We see a critical need for structural reforms to promote private sector growth and job creation. Therefore, we are moving at the present time to establish a relationship independent of free and equal between Iraq and the International Monetary Fund, but we still hope that you can this relationship to help Iraq, and we stand ready, of course, to return to a level of cooperation together more intense”
He added, “Our goal ultimately is to support the Iraqi people, and will provide this support in the best way we can use, and for evaluation of the Fund for the latest performance record of the Iraqi economy, and what are the prospects for this economy?”
It surpassed the economic growth rate of 8 percent in 2012, and is likely to rise to 9 percent in 2013 when oil production rises to the level of 3.3 million barrels per day. As well as the inflation rate fell from 6 percent at year-end 2011 to 3.6 percent at the end of last year, and should rise only a slight rise to about 5 percent in 2013.
The external situation of is also presumed to be quite firm. From 61 billion USD, the foreign reserves of Iraqi central bank have risen to 70 billion USD at the end of 2012. The fiscal reserves to the Development Fund for Iraq has risen is the other (16.5) billion U.S. dollars to 18 billion U.S. dollars.
Updated 27 Jul 2013 | Soruce: Al Sabah | By S.Seal