The International Monetary Fund (IMF) announced on Thursday that it is collaborating with Iraqi officials to prepare a new rescue program for Iraq. The Iraqi economy has been severely affected by wars and recent developments, and this international organization is striving to provide solutions to help improve the economic situation in the country.
Economic Challenges in Iraq
The U.S. and Israeli war against Iran, which began in late February, has increased tensions in the region and severely reduced economic activities in Iraq. This war has negatively impacted energy supply in the Gulf and particularly put pressure on the Strait of Hormuz, one of the world's most important energy supply routes. Iraq is heavily dependent on its energy exports, and this dependency puts the country's economy at risk.
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Before the war began, Iraq was facing serious financial challenges, and the International Monetary Fund has predicted that the country's economy will shrink by 16 percent this year. This situation indicates an urgent need for support programs and economic reforms in Iraq.
The Role of the International Monetary Fund
Julie Kozak, spokesperson for the International Monetary Fund, said at a press conference in Washington: "Our current plan is to work with Iraqi officials to better understand their priorities and identify how to address economic vulnerabilities." She also referred to Iraq's severe financial constraints before the war and raised concerns about the country's non-oil revenue base, which adds more pressure to the country's financial balance.
According to IMF data, Iraq has about $428 million in interest payments to the organization due by 2030. Iraq's last program with the IMF ended in 2019, and the country is now seeking a new program.
Kristalina Georgieva, the head of the International Monetary Fund, first announced at the organization's annual meetings in Bangkok that Iraq has approached the Fund for a new program. She also noted the resilience of global economic growth despite the wars in Iran and Ukraine, but warned that the outcomes are distributed unevenly and vulnerable countries are significantly affected by these conflicts.
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