Iraq: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Iraq
IMF Staff Country Reports, May 16, 2024
Source details
- Canonical URL
- Iraq: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Iraq
Other formats
Bibliographic details
- Published: May 16, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400275357.002
Domestic stability and budgetary developments
- Domestic stability has improved since the new government took office in October 2022, facilitating the passage of Iraq’s first three-year budget.
- The three-year budget entailed a large fiscal expansion starting in 2023.
- This ongoing fiscal expansion is expected to boost growth in 2024, while increasing vulnerability to oil price fluctuations.
Macroeconomic trade-offs and risks
- The fiscal expansion is projected to come at the expense of a further deterioration of fiscal and external accounts.
- Without policy adjustment, the risk of medium-term sovereign debt stress is high and external stability risks could emerge.
- Key downside risks include much lower oil prices or a spread of the conflict in Gaza and Israel.
Policy priorities and recommendations
- A fiscal adjustment is needed to stabilize debt over the medium term while protecting critical social and capital spending.
- Large savings can be attained from containing the outsized public wage bill.
- Policy measures aimed at mobilizing additional non-oil revenues are recommended to bolster fiscal space.
- Private sector development and economic diversification are crucial to ensure long-term external sustainability and foster private job creation.
Analytical focus areas highlighted by the report
- Assessment of the fiscal stance and public debt risks under ongoing fiscal expansion.
- Vulnerability analysis to oil price fluctuations and regional conflict spillovers.
- Options for revenue mobilization, public wage containment, and protection of priority spending.
- Structural reforms to support private sector development and economic diversification.
International Monetary Fund. "Iraq: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Iraq"
Content in this bundle
- 1. Economic Developments, 2015–23