Iraq: Selected Issues
IMF Staff Country Reports, July 26, 2019
Source details
- Canonical URL
- Iraq: Selected Issues
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Bibliographic details
- Published: July 26, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513508917.002
Key findings and diagnostics
- A ceiling on current spending is proposed as a fiscal rule that would be simple and easy to monitor.
- Iraq’s heavy dependence on volatile oil revenues creates significant fiscal management challenges.
- The procyclicality of fiscal policy has led to short-term economic volatility and hindered long term development.
- Important fiscal institutions that exist in many resource-rich countries—fiscal rules, stabilization funds, and fiscal responsibility laws—are lacking in Iraq.
- Moving to a risk- and rules-based approach is assessed as timely for Iraq.
Policy framework proposed
- Anchor fiscal policy on maintaining adequate fiscal buffers.
- Introduce operational fiscal rules designed to:
- Achieve the target for fiscal buffers.
- Protect capital expenditure and create space to scale up capital spending.
- A ceiling on current spending is highlighted as a rule that would support efforts to:
- Scale up capital expenditure.
- Build fiscal buffers to reduce fiscal policy procyclicality.
- Help secure debt sustainability.
Rationale and expected benefits
- Simplicity and ease of monitoring make a current-spending ceiling operationally attractive for Iraq.
- Building fiscal buffers can reduce procyclicality and short-term volatility associated with oil revenue fluctuations.
- Protecting capital expenditure helps advance long-term development objectives while maintaining fiscal sustainability.
Content in this bundle
- Iraq: Selected Issues; IMF Country Report No. 19/249; July 3, 2019