Washington, DC:
A staff team of the International Monetary Fund (IMF) led by Tokhir Mirzoev
held a virtual mission with the Iraqi authorities during November 28 -
December 2 to discuss recent economic developments and outlook as well as
policy priorities in the period ahead.
At the end of the mission, Mr. Mirzoev issued the following statement:
“The Iraqi economy is recovering from last year’s sharp contraction, helped
by the increase in oil revenues and easing of the COVID-19 containment
measures. In recent weeks, new COVID-19 infections have declined
significantly, and the vaccination rate has been gradually improving. Real
non-oil GDP is expected to expand by 12 percent in 2021 and oil output is
projected to gradually increase in line with the OPEC+ agreements.
Inflation has reached 7.2 percent in September and is projected to ease in
the coming months. The fiscal and external current account balances are
expected to improve significantly in 2021 from double-digit deficits in
2020, mainly due to higher oil prices. The recovery is expected to continue
in the medium term albeit subject to considerable downside risks, most
notably related to the oil market volatility and the COVID-19 pandemic.
“Higher oil revenues present an important opportunity to tackle Iraq’s
significant underlying vulnerabilities, strengthen resilience to future
climate and other challenges, and advance key socio-economic priorities.
Achieving these goals will require strengthening public finances, while
creating the fiscal space for much-needed investment and social safety nets
and promoting private sector development. To this end, key priorities
include a civil service reform aimed at increasing public sector’s
efficiency and containing the wage bill, reducing inefficient energy
subsidies, diversifying fiscal revenues, stemming losses in the electricity
sector, strengthening governance. Improving the coverage and targeting of
social assistance will help better protect the most vulnerable. And
restructuring large state-owned banks and strengthening their governance
will be critical to revitalizing the financial sector and ensuring private
sector’s access to finance. The IMF stands ready to support Iraq in these
endeavors.
“The IMF staff team would like to thank the authorities for candid and
productive discussions during this mission.”
