## International Compact with Iraq, Statement by Adam Bennett, Senior Advisor, Middle East and Central Asia Department, International Monetary Fund

_IMF News, May 29, 2008_

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**Canonical URL:** [International Compact with Iraq, Statement by Adam Bennett, Senior Advisor, Middle East and Central Asia Department, International Monetary Fund](https://www.imf.org/en/news/articles/2015/09/28/04/53/sp052908)

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## Bibliographic details
- Authors: Arrangement. In
- Published: May 29, 2008

---

### IMF engagement and recent history
- Fund began to reengage with Iraq in the summer of 2003.
- Financial support provided:
  - Emergency Post-Conflict Assistance in September 2004
  - Stand-By Arrangement in December 2005
  - Second Stand-By Arrangement in December 2007
- The International Compact with Iraq (established on May 3, 2007) and the Fund's two Stand-By Arrangements are based on the same medium-term macroeconomic framework and share consistent objectives.

### Key achievements (past year)
- Macroeconomic stabilization and inflation reduction:
  - Inflation reduced from 65 percent at the end of 2006 to 5 percent at the end of 2007, "a rate at which it has remained so far in 2008."
- Oil production and exports:
  - Oil exports had remained virtually constant at 1.4 mpbd for four years.
  - Oil exports averaged 1.8 mbpd in the first four months of 2008.
- Fiscal policy and subsidies:
  - Explicit fuel subsidies have been all but eliminated.
  - Domestic fuel prices were further increased in 2007, after earlier adjustments in late 2005 and in 2006.
- Structural reforms:
  - Amendments to the new pension law, putting the pension system on a sustainable fiscal footing, were passed in October last year.
  - Audits of the country's two largest state banks (Rafidain and Rasheed banks) are underway as a first step to developing a restructuring program.
  - The Central Bank of Iraq has been making progress in improving its accounting and governance structure.

### Remaining challenges and policy priorities
- Security:
  - "First and foremost is the continuing challenge to improve security."
- Macroeconomic and fiscal discipline:
  - Maintain a stable macroeconomic environment.
  - Keep wages and other current public spending under control and at levels that the economy can sustain without reigniting inflation.
- Institutional and structural reforms:
  - Strengthen the rule of law and improve the business climate to enable implementation of investment plans and private sector development.
- Debt relief and creditor negotiations:
  - The third and final stage of the Paris Club debt-reduction agreement is scheduled for December 2008 and is contingent on completion of the second and final review of the Stand-By Arrangement.
  - Continue to make progress in reaching bilateral debt agreements with Iraq's non-Paris Club creditors to secure fiscal space for reconstruction.

### Outlook, Fund support, and conditionalities
- Near-term review:
  - Discussions on the first review under the current Stand-By Arrangement were scheduled to begin shortly, with the hope of a positive outcome and completion of the review.
- Expected Fund support:
  - The Fund will continue to support the International Compact with Iraq through the medium-term macroeconomic policy framework under the Stand-By Arrangement.
  - The Fund will continue to provide policy advice and technical assistance.
- Policy linkage and expected benefits:
  - Keeping the IMF-supported program on track will help Iraq secure economic reform objectives and achieve long-term debt sustainability.
  - The Stand-By Arrangement and the Compact have worked together to help the Iraqi government achieve its economic goals, and their joint continuation is expected to yield further successes.

*Statement by Adam Bennett, Senior Advisor, Middle East and Central Asia Department, International Monetary Fund, Stockholm, Sweden, May 29, 2008.*

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## References

- [Iraq and the IMF](http://www.imf.org/external/country/IRQ/index.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp052908_