Financial Blow: Iraq seeks emergency assistance from IMF

Suffering from severe financial crisis, the government of Iraq has requested emergency assistance from the International Monetary Fund and talks are ongoing between the parties.

According to the media reports, Iraq finance minister is in talks with the IMF for a $6 billion loan package. He added that Iraq also planned other types of funding to help plug the budget gap. Once the spending plan was approved, the government would move to issue $5 billion in domestic bonds to expand its financial base.

An IMF representative said in a statement that Iraq authorities have requested emergency help from the IMF under the Rapid Financing Instrument, and indicated their intention to also request a longer-term arrangement with the Fund in support of planned economic reforms.

The statement added that, “Discussions of the authorities’ request for emergency assistance are ongoing.”

The IMF’s Rapid Financing Instrument provides quick financial assistance, which is available to all member countries facing an urgent balance-of-payments need.

Financial assistance under the RFI is provided without the need for a full-fledged program or review, according to the IMF.

It is worth mentioning here that Iraq devalued the dinar last month after a collapse in global oil prices, a major source of Iraq’s financial resources.

The OPEC member’s economy has only a small manufacturing base and almost all goods are dollar-priced imports.

Media reports also said that Iraq is also speculating to cut oil output in January and February to make up for breaching its OPEC+ quota last year.

The oil exports which includes those from the semi-autonomous northern region of Kurdistan, will be slightly more than 3 million barrels a day during the period.

The data for last month was almost 3.3 million. Baghdad’s ability to meet these targets depends on whether the Kurdistan Regional Government agrees to reduce supplies from fields under its control.