Iraqi finances have been hit hard by the plunge of oil prices since last year as well as by the Islamic State insurgency. The government has projected a budget deficit of about $25 billion this year, in a budget of some $100 billion.
Aid from the IMF could ease the pressure and by increasing investor confidence, help Iraq raise money from other sources. Baghdad has said it plans to issue $5 billion of debt in its first international bond sale for nine years.
"Teams will work on the issue in coming weeks. We hope we can reach a conclusion relatively soon," Masood Ahmed, Director of the IMF's Middle East and Central Asia Department, said in an interview.
Ahmed said the aid would probably come in the form of a Rapid Financing Instrument (RFI) and would be "relatively small, about $800 million or so".
The RFI might pave the way in the longer term for a larger IMF lending programme for Iraq, if that were needed, Ahmed added. Such a programme could involve more extensive economic policy commitments by Baghdad.
Iraqi Finance Minister Hoshiyar Zebari told Reuters last week that Baghdad would obtain a sovereign credit rating to facilitate the bond issue. The government has also introduced or is planning measures including a local currency bond issue to banks, taxes on some consumer goods, and public wage cuts.
Source, https://www.zawya.com/story/IMF_says_may_agree_on_USD800m_loan_to_Iraq_in_weeks-ZAWYA20150506081950/
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