Iraq get biggest ever IMF loan

The International Monetary Fund

War-torn Iraq is to receive a US$3.6 billion loan by the International Monetary Fund (IMF) - the biggest to the country so far.

The IMF executive board approved the two-year so-called Stand-By Arrangement for Iraq "to cover the country's balance of payments needs" after the economy was hit hard by falling oil prices in 2009, the Washington-based institution said.

The money will be used to rebuild Iraq's battered infrastructure and US$455 million will be made immediately available to deal with the most urgent issues. Iraq has received similar loans from the IMF in the past, with the condition of removing subsidies from manufacturers and farmers.

Brutal sectarian conflict

Declining oil prices last year left Iraq, dependent on oil for almost 90 percent of its revenue, with a public deficit of 20 percent of economic output, Ron van Rooden, IMF mission chief in Iraq, said in a conference call with reporters, and it faces a financing gap of close to US$5 billion until the end of 2011.

Since oil prices started picking up Iraq have fared slightly better and the nation's financial needs have been trimmed slightly.

Zawya reports that the financial shortfall in Iraq's budget comes at a difficult time as its 29 million people struggle to emerge from a brutal sectarian conflict triggered by the 2003 US-led invasion.

The new IMF loan follows a 15-month program supported by a Stand-By Arrangement at the time valued at 744 million dollars approved on December 20, 2007, which expired on March 18, 2009.

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Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

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