The IMF Stands Ready to Help Iraq--Statement of Horst Köhler, Managing Director of the International Monetary Fund to the International Donors' Conference for the Reconstruction of Iraq
IMF News, October 24, 2003
Source details
- Canonical URL
- The IMF Stands Ready to Help Iraq--Statement of Horst Köhler, Managing Director of the International Monetary Fund to the International Donors' Conference for the Reconstruction of Iraq
Other formats
Bibliographic details
- Published: October 24, 2003
Overview and purpose
- Statement delivered at Donor Meeting in Madrid.
- Objective: assure the international community that the IMF will work actively in the reconstruction and development of Iraq and for stability and prosperity in the Middle East region.
The IMF's role to date
- IMF engagement from the outset of Iraqi reconstruction.
- Activities undertaken:
- Preparations for the currency reform that is now successfully under way.
- Advising on macro-economic policy issues including bank reform and regulation.
- Development of the 2004 budgetary framework.
- Close cooperation with the Governing Council and the Coalition Provisional Authority, and co-ordination with the World Bank and the United Nations.
- Continued involvement despite security setbacks.
Six areas of IMF contribution going forward
- 1) Economic policy advice
- Help create a stable macroeconomic framework to underpin economic revival.
- Aim to reduce uncertainty, encourage private sector investment and job creation, and curb the risk of financial crisis.
- Emphasis on comprehensive reforms, development of sound institutions and policymaking processes, and Iraqi ownership of reforms.
- Lessons from transition and post-conflict cases include:
- Ensuring transparency and observance of best practices, especially in the energy sector and in operations and privatization of state-owned enterprises.
- Establishing legal, institutional and regulatory frameworks for markets to work effectively.
- Designing appropriate safety nets that contribute to social stability.
- 2) Technical assistance
- Expand assistance on a wide range of issues to build administrative and policy-making capacity.
- Specific needs: modern, unified budget and tax systems; Central Bank assistance in designing and conducting monetary policy and ensuring proper functioning of the banking system; rebuilding Iraq's statistical database.
- Develop training programs for Iraqi officials.
- Coordinate technical assistance provided by other agencies and governments.
- 3) Transparency and monitoring
- Welcome establishment of the International Advisory and Monitoring Board to ensure transparent use of the Development Fund for Iraq and that petroleum sales follow prevailing international market best practices.
- IMF will appoint a Fund representative to this Board.
- 4) External debt resolution
- Initial estimates of Iraq's external debt (without reparation claims) are around $120 billion.
- Without substantial debt relief, Iraq cannot restore creditworthiness or regain access to private capital to finance future growth.
- IMF cooperating with Paris Club creditors and approaching non-Paris Club creditors to develop reliable estimates of Iraq's external obligations.
- IMF stands ready to help resolve the issue, recognizing resolution is a matter for Iraq and its creditors.
- 5) Financial assistance
- IMF stands ready to provide financial assistance in a phased manner and in line with IMF policies and procedures.
- Possible financing package described:
- Initially make available $850 million as emergency post-conflict assistance.
- Followed by amounts between $850 million and $1.7 billion annually under regular facilities.
- Total IMF assistance could range from $2.5 billion to $4.25 billion over a three-year period.
- Disbursement conditional on IMF assessment of balance of payments need, development of strong economic programs, and Iraqi authorities’ ability to implement such programs effectively.
- 6) Regional integration and technical assistance center
- Emphasize integration of Iraq into the region and the world as key to a virtuous cycle of growth.
- Regional partners should be closely involved in reconstruction efforts.
- IMF will contribute to developing a policy framework, in cooperation with regional institutions, for re-integration of Iraq into the Middle East and the world economy.
- Proposal to the IMF Executive Board to establish a regional technical assistance center in the Middle East; donors urged to support its establishment.
Conditions and constraints
- IMF effectiveness conditioned by actions of the international community and the security situation.
- Security problems currently hamper reconstruction work and recovery of economic activity.
- Resolution of security issues will aid citizens’ confidence and economic recovery.
Closing assessment
- Reconstruction is an immense challenge but also a historic opportunity given Iraq's substantial natural and human resources and historical contributions.
- Confidence expressed that collective efforts can help Iraq return to stability and prosperity.
- The IMF stands ready to do its part.
Statement of Horst Köhler, Managing Director of the International Monetary Fund to the International Donors' Conference for the Reconstruction of Iraq; October 24, 2003.