The International Monetary Fund: It Is Expected That Iraq’s Economy Will Recover By 5.3% For The Year 2024-2025, 22 MAY

 The International Monetary Fund: It Is Expected That Iraq’s Economy Will Recover By 5.3% For The Year 2024-2025

Posted On05-21-2024 By Sotaliraq  Translated by / Hamed Ahmed  The International Monetary Fund indicated in its latest report that there are expectations for an economic recovery in Iraq for the year 2024-2025, reaching a rate of 5.3% before gradually stabilizing at a rate of 3.5% in the medium term, warning at the same time that the economic situation in general is fragile and that without action Economic and financial reforms regarding spending. This growth is vulnerable to decline if oil prices fall.

The Executive Board of the International Monetary Fund stated in its report issued on May 16, 2024, that local stability has improved further since the new government took office in October 2022, which facilitated the passage of the first three-year budget in Iraq, which led to a huge financial expansion starting in 2023. This supported a strong recovery in Iraq's non-oil economy after a contraction in 2022, and a decline in inflation by the end of 2023 by 4%.

However, Fund experts point out that the economic situation in Iraq is still fragile, as its non-oil imports and exports constitute only a small portion of the gross domestic product, making that country vulnerable to major fluctuations in oil prices.

On the other hand, the public sector is still dominant in the arena, compared to a decline in private sector development procedures for reasons related to cases of corruption and bureaucracy, as well as dilapidated infrastructure and difficulty obtaining credit, and unemployment rates are still high, especially among the youth segment, stressing the necessity of taking reform measures. Economic and financial.

The International Monetary Fund expected the growth and recovery of the gross domestic product in Iraq for the year 2024-2025, driven by improved oil production rates and financial expansion, indicating its growth by 1.4% in the year 2024, expecting the country’s gross domestic product growth rates to increase to reach 5.3% in the year 2025 before stabilizing. In the medium term, gradually at a rate of 3.5%.

While Fund experts pointed out that the risks of a decline in oil prices and an increase in OPEC+ demands to reduce production would cast a shadow on the growth rate and increase pressure on external debt, stressing the necessity of taking radical economic and financial structural reform measures to ensure continued financial and financial stability.

External debt and the necessity of developing the aspect of diversifying the sources of the economy and achieving stable and comprehensive growth for the private sector.

The Fund's experts recommend encouraging the Iraqi authorities to focus their control on public spending lists and mobilizing non-oil revenues, with the necessity of making reforms in controlling customs port resources and restricting excessive public expenditures to achieve a financial settlement while reforming the financial aid and retirement system.

The Fund's experts also recommended the need to restrict the Central Bank's financial policy efforts and strengthen the monetary liquidity policy framework, noting that improving coordination between financial and monetary operations will help absorb the increase in liquidity and enhance the financial transfer policy.

They also stressed the need to restructure banks and government banks, encourage the modernization of the private banking sector, and facilitate the establishment of mutual banking relationships.

The report states that developing the private sector and diversifying the sources of the economy are essential factors to ensure long-term financial stability and enhance job creation. This requires comprehensive reform of the private market aimed at improving society's capital and improving the environment for private commercial activities, including reforming the electricity sector and combating corruption.

The experts stressed the need to enhance the development of the private sector and develop economic diversification to address the long-term unemployment crisis and confront any future economic challenges.

As it is expected that the rate of the number of people entering working age will increase rapidly, adding 0.8% of the labor force entering the market annually, which requires a growth in the gross domestic product at a rate of 5% for the next ten years to be able to absorb this growth in the labor force and reduce the unemployment rate. To one degree.    LINK