{
  "title": "IMF Executive Board Concludes 2024 Article IV Consultation with Iraq",
  "publication": "IMF News, May 15, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/05/15/pr24165-imf-concludes-2024-article-iv-consultation-with-iraq",
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  "summary": "Domestic stability has improved since the new government took office in October 2022, facilitating the passage of Iraq’s first three-year budget, which entailed a large fiscal expansion starting in 2023.",
  "publishDate": "2024-05-15",
  "sections": [
    {
      "heading": "Recent developments and macroeconomic context",
      "content": "- Domestic stability improved since the new government took office in October 2022, facilitating the passage of Iraq’s first three-year budget, which entailed a large fiscal expansion starting in 2023.\n- The fiscal expansion supported a strong recovery in Iraq’s non-oil economy after a contraction in 2022.\n- Iraq was largely unaffected by the ongoing conflict in the region.\n- Domestic inflation declined to 4 percent by end-2023, reflecting lower international food prices, the currency revaluation as of February 2023, and the normalization in trade finance.\n- Imbalances have worsened due to the large fiscal expansion and lower oil prices."
    },
    {
      "heading": "Outlook and risks",
      "content": "- The ongoing fiscal expansion is expected to boost growth in 2024, at the expense of a further deterioration of fiscal and external accounts and increased vulnerability to oil price fluctuations.\n- Without policy adjustment, the risk of medium-term sovereign debt stress is high and external stability risks could emerge.\n- Key downside risks include much lower oil prices or a spread of the conflict in Gaza and Israel."
    },
    {
      "heading": "Executive Board assessment — findings and priorities",
      "content": "- Directors welcomed the strong economic rebound, declining inflation, and the implementation of the first-ever three-year budget.\n- Directors noted risks are tilted to the downside given regional conflicts and large dependence on volatile oil prices.\n- Directors underscored the need for sound macroeconomic policies and structural reforms to:\n  - Secure fiscal and debt sustainability.\n  - Advance economic diversification.\n  - Achieve sustainable, inclusive, and private sector-led growth."
    },
    {
      "heading": "Policy recommendations (summarized)",
      "content": "- Fiscal policy\n  - Implement a gradual, yet sizeable fiscal adjustment to stabilize debt in the medium term and rebuild fiscal buffers.\n  - Focus on controlling the public wage bill and phasing out mandatory hiring policies.\n  - Mobilize non-oil revenues and better target social assistance.\n  - Promptly implement customs and revenue administration reforms.\n  - Fully implement the Treasury Single Account.\n  - Strictly control and limit the use of extrabudgetary funds and government guarantees.\n  - Limit monetary financing.\n  - Reform the pension system.\n- Monetary and financial sector policy\n  - Continue tightening monetary policy and enhance the liquidity management framework.\n  - Improve coordination between fiscal and monetary operations to absorb excess liquidity and enhance monetary policy transmission.\n  - Accelerate restructuring of large state-owned banks.\n  - Further modernize the private banking sector, including facilitating correspondent banking relationships, reducing regulatory uncertainties, and promoting efficiency and competitiveness of private banks.\n- Structural and governance reforms\n  - Level the playing field between public and private jobs.\n  - Boost female labor force participation.\n  - Reform education and labor laws.\n  - Improve governance and combat corruption.\n  - Strengthen the AML-CFT framework.\n  - Enhance public procurement and business regulations.\n  - Address electricity sector inefficiencies.\n  - Continue efforts toward WTO accession.\n  - Improve the coverage and timeliness of statistics.\n- Engagement with IMF\n  - Close engagement with the Fund, including through continued technical assistance, would be useful.\n  - Directors welcomed the authorities’ request for a Policy Coordination Instrument."
    },
    {
      "heading": "Key economic indicators (2023–25, selected)",
      "content": "- Population: 455 million (2023 est.)\n- Per capita GDP: US$ 5,591(2023)\n- Quota: SDR 1,663.8 million\n- Poverty rate: 23 percent (2014)\n- Main products and exports: Crude oil\n- Key export markets: United States, India, China, South Korea\n\n- Output\n  - Real GDP (% change): 2023 Est. -2.2; 2024 Proj. 1.4; 2025 Proj. 5.3\n  - Non-oil real GDP (% change): 2023 Est. 6.0; 2024 Proj. 3.5; 2025 Proj. 3.3\n- Prices\n  - Inflation, end of period (%): 2023 Est. 4.0; 2024 Proj. (not separately listed)\n- Central Government Finances (% of GDP)\n  - Revenues and grants: 2023 Est. 42.6; 2024 Proj. 40.1; 2025 Proj. 38.4\n  - Oil revenue: 2023 Est. 38.8; 2024 Proj. 36.7; 2025 Proj. 34.9\n  - Expenditure and net lending: 2023 Est. 43.9; 2024 Proj. 47.7; 2025 Proj. 47.2\n  - Wages and pensions: 2023 Est. 20.2; 2024 Proj. 23.6; 2025 Proj. 23.4\n  - Fiscal balance: 2023 Est. -1.3; 2024 Proj. -7.6; 2025 Proj. -8.8\n  - Total government debt: 2023 Est. 44.2; 2024 Proj. 48.2; 2025 Proj. 54.6\n- Money and Credit\n  - Broad money (% change): 2023 Est. 7.5; 2024 Proj. 8.9; 2025 Proj. 9.1\n  - Credit to the private sector (% change): 2023 Est. 17.0; 2024 Proj. 10.9; 2025 Proj. 9.3\n- Balance of Payments\n  - Current account (% of GDP): 2023 Est. 2.6; 2024 Proj. -3.6; 2025 Proj. -5.1\n  - Foreign direct investment (% of GDP): 2023 Est. 3.2; 2024 Proj. 2.9\n  - Gross reserves (US$ billions): 2023 Est. 112.0; 2024 Proj. 100.5; 2025 Proj. 93.4\n  - In months of imports: 2023 Est. 11.4; 2024 Proj. 9.7; 2025 Proj. 8.7\n  - Total external debt (% of GDP): 2023 Est. 23.1; 2024 Proj. 21.3; 2025 Proj. 19.8\n- Exchange Rate\n  - Exchange rate (dinar per US$; period average): 2023 Est. 1316; 2024 Proj. 1300\n  - REER (% change, end of period)1/: 2023 Est. 10.0\n- Oil and Gas Sector\n  - Crude oil production (millions of barrels/day): 2023 Est. 4.1; 2024 Proj. 4.4\n  - Crude oil exports (millions of barrels/day): 2023 Est. 3.4; 2024 Proj. 3.7\n  - Average crude oil export price (US$/barrel): 2023 Est. 79.2; 2024 Proj. 77.2; 2025 Proj. 72.3\n  - Crude oil exports (US$ billions): 2023 Est. 100.2; 2024 Proj. 97.0; 2025 Proj. 97.9\n\nSource: IMF Executive Board Concludes 2024 Article IV Consultation with Iraq (Press Release No. 24/165), May 15, 2024.\n\n---\n\n\n References\n\n- Iraq and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/05/15/pr24165-imf-concludes-2024-article-iv-consultation-with-iraq"
    }
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    "Published: May 15, 2024",
    "Domestic stability improved since the new government took office in October 2022, facilitating the passage of Iraq’s first three-year budget, which entailed a large fiscal expansion starting in 2023.",
    "The fiscal expansion supported a strong recovery in Iraq’s non-oil economy after a contraction in 2022.",
    "Iraq was largely unaffected by the ongoing conflict in the region.",
    "Domestic inflation declined to 4 percent by end-2023, reflecting lower international food prices, the currency revaluation as of February 2023, and the normalization in trade finance.",
    "Imbalances have worsened due to the large fiscal expansion and lower oil prices.",
    "The ongoing fiscal expansion is expected to boost growth in 2024, at the expense of a further deterioration of fiscal and external accounts and increased vulnerability to oil price fluctuations.",
    "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.",
    "Directors welcomed the strong economic rebound, declining inflation, and the implementation of the first-ever three-year budget.",
    "Directors noted risks are tilted to the downside given regional conflicts and large dependence on volatile oil prices.",
    "Directors underscored the need for sound macroeconomic policies and structural reforms to:",
    "Fiscal policy",
    "Monetary and financial sector policy",
    "Structural and governance reforms",
    "Engagement with IMF",
    "Population: 455 million (2023 est.)",
    "Per capita GDP: US$ 5,591(2023)",
    "Quota: SDR 1,663.8 million",
    "Poverty rate: 23 percent (2014)",
    "Main products and exports: Crude oil",
    "Key export markets: United States, India, China, South Korea",
    "Output",
    "Prices",
    "Central Government Finances (% of GDP)",
    "Money and Credit",
    "Balance of Payments",
    "Exchange Rate",
    "Oil and Gas Sector",
    "[Iraq and the IMF](http://www.imf.org/external/country/IRQ/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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