DINAR REVALUATION REPORT: IMF Article VIII and Its Implications for Iraq in 2024, 14 SEPT

 IMF Article VIII and Its Implications for Iraq in 2024

In 2024, the relationship between Iraq and the International Monetary Fund (IMF) under Article VIII of the IMF's Articles of Agreement has been a significant focus of economic discussions. 1 Article VIII centers on the provision of regular economic consultations and surveillance by the IMF, aiming to promote stability and growth in member countries. For Iraq in 2024, these consultations have led to critical assessments and recommendations regarding fiscal policy, economic diversification, and structural reforms. 3

Economic Growth and Fiscal Policy

The IMF's 2024 Article IV Consultation highlighted Iraq's projected economic growth, driven by fiscal expansion. 1 The expansion is expected to boost growth in the short term but raises concerns about fiscal and external account vulnerabilities in the medium term, particularly in relation to oil price volatility. 2 The IMF recommended a significant fiscal adjustment, emphasizing the need to control the public wage bill and increase non-oil tax revenues to ensure fiscal sustainability.  1

Economic Diversification and Structural Reforms

Recognizing Iraq's heavy reliance on oil revenues, the IMF underlined the importance of economic diversification to reduce vulnerability to oil price shocks and foster long-term growth. 1 Recommendations included enabling private sector development through labor market reforms, modernizing the financial sector, restructuring state-owned banks, and reforming the pension and electricity sectors. 1 These reforms are crucial for absorbing the expanding labor force, boosting non-oil exports, and broadening the tax base.

Non-Oil Economy and Inflation

The non-oil sector of Iraq's economy is projected to continue growing, although risks persist, including potential declines in oil prices or extended OPEC+ cuts.  5Headline inflation has declined, reflecting lower international food and energy prices and the impact of currency revaluation. 5 Despite this, Iraq's fiscal position worsened due to lower oil revenue and increased expenditure. 5

Iraq's Relationship with the IMF

Iraq's membership with the IMF since 1945 has involved regular economic surveillance and lending commitments. 3 The most recent loan from the IMF, approved in 2016, aimed to help Iraq manage lower oil prices and maintain debt sustainability. 6

Concluding Thoughts

The implications of IMF Article VIII for Iraq in 2024 underscore the need for balanced fiscal policies, economic diversification, and structural reforms. While the fiscal expansion is expected to stimulate growth in the short term, sustainable economic development will require addressing the country's reliance on oil revenues and implementing reforms to foster a more resilient and diversified economy.

LATEST FROM PETRA : ABOUT THE IMF ARTICLE VIII & IRAQ, 14 SEPT

  Petra  

 They were expecting Iraq to be IMF Article VIII compliant or at least having agreed to the obligations that requires. One of those requirements is having all restrictions lifted, which comes to Article XIV.  

They've been using a lot of pieces of Article VIII to get to where they are now.  But they've never accepted the article, which is very simple.  It's basically a document that Alaq and Sudani agree to.  They sign it and send it to the IMF accepting all portions of Articles VIII.

----

Petra

  Early Monday morning was the article demonstrating the fact that  Sudani was considering changing the rate of the dinar from 1310 to 1.32 which for us in the United States is $0.79...  

Then the very next day we get an article talking about the new small category notes.  They're talking rate, they're talking notes.  And then you got Tannini the Commerce Director there talking about a surprise could happen within hours in regards to their monetary reform...

https://dinarevaluation.blogspot.com/2024/03/rv-update-by-petra-15-march.html

IMF Article IV Consultation with Iraq: 2024 Findings and Recommendations

DINAR REVALUATION REPORT: IMF Article IV Consultation with Iraq: 2024 Findings and Recommendations, 14 SEPT

 IMF Article IV Consultation with Iraq: 2024 Findings and Recommendations

The International Monetary Fund (IMF) conducted its 2024 Article IV consultation with Iraq, concluding with a comprehensive report and a series of recommendations for the country's fiscal and economic policies. 1 The consultation aimed to assess Iraq's economic health, fiscal sustainability, and the potential for long-term growth, taking into account the country's reliance on oil revenues and the challenges it faces in diversifying its economy.

Key Findings

Economic Growth and Fiscal Expansion

The IMF noted that Iraq's economic growth is projected to continue, supported by a fiscal expansion that commenced in 2023. 1 However, the medium-term outlook is marred by increased vulnerability to oil price volatility, which has become a significant concern for the nation's fiscal stability.

Non-Oil Economy and Fiscal Adjustment

Iraq's non-oil economy, which had stalled in 2022, rebounded strongly in 2023, a trend expected to continue in 2024. 3 Despite this, the country faces the challenge of reducing oil dependence and ensuring fiscal sustainability. This will require a significant fiscal adjustment, focusing on controlling the public wage bill and increasing non-oil tax revenues.  1

Private Sector Development and Labor Market Reforms

To sustain higher economic growth and absorb the rapidly expanding labor force, Iraq needs to develop its private sector. 1 This includes implementing labor market reforms, modernizing the financial sector, restructuring state-owned banks, and reforming the pension and electricity sectors. 3

Recommendations

The IMF emphasized the need for sound macroeconomic policies and structural reforms to secure fiscal and debt sustainability. 3 Key recommendations include:Fiscal Policy Adjustment: Reducing public expenditure, particularly the wage bill, and increasing non-oil tax revenues to address fiscal imbalances. 1 Structural Reforms: Enhancing the private sector's role in the economy through labor market reforms, financial sector modernization, and state-owned enterprise restructuring. 3Diversification of the Economy: Reducing reliance on oil revenues by boosting non-oil exports and broadening the tax base. 1

Conclusion

The 2024 Article IV consultation underlined Iraq's economic resilience and the challenges it faces in achieving sustainable and diversified growth. The IMF's recommendations point to a path for Iraq to strengthen its fiscal position, develop its private sector, and reduce its dependence on oil revenues, all critical steps for long-term economic stability and prosperity.

LATEST FROM MILITIAMAN, 14 SEPT

  Militia Man

  The IMF Article IV 2024 consultation, one of the most important things was for [Iraq] to accelerate accession to the WTO.

----

Summary

Iraq’s Ministerial Council of Economy is advancing economic unity between the federal government and Kurdistan, focusing on financial reforms and salary equivalency.

Highlights

• 🤝 Collaborative Meetings: Recent meetings between the federal government and Kurdistan aim for economic unity.
• 💰 Salary Equivalency: Discussions include ensuring salary parity for regional employees.
• 🔍 Budget Reforms: Emphasis on addressing financial issues like oil, energy, and border revenues.
• 📈 Private Sector Growth: Plans to enhance the private sector’s role in the economy.
• 🌍 Global Attention: Iraq’s economic strategies are gaining international interest.
• 📊 Unified Treasury Accounts: Establishing a unified treasury for better financial management.
• ⚖️ Constitutional Rights: Ensuring all citizens benefit from new economic policies aligned with constitutional rights.

Key Insights

• 🌐 Economic Integration: The meetings signify a critical step towards integrating Kurdistan’s economy with the federal framework, promoting a cohesive financial strategy.
• 💼 Private Sector Engagement: By focusing on private sector involvement, Iraq aims to diversify its economy and reduce dependency on oil revenues, fostering sustainable growth.
• 🔗 Unified Financial Framework: The establishment of a unified treasury account reflects a commitment to transparent financial management and accountability, which is vital for investor confidence.
• 📈 Revenue Streams: The focus on oil, energy, and border revenues indicates a strategic approach to harnessing Iraq’s natural resources for economic stability.
• 🤔 Constitutional Compliance: The emphasis on constitutional rights in financial discussions demonstrates a commitment to equitable governance and fair resource distribution.
• 🏛️ Political Dynamics: The support for Prime Minister Al Sudani highlights the political backing necessary to implement these reforms, ensuring stability during transitions.
• 🚀 Future Prospects: The positive atmosphere in these meetings suggests potential for significant economic progress in Iraq, attracting global attention and investment opportunities.
• https://dinarevaluation.blogspot.com/2024/09/militiaman-cc-notes-highlights-12-sept.html
  

THE NEW DIGITAL ECONOMIC SYSTEM BACKED IN ASSETS OF IRAQ #iraqidinar @DI...

Washington accuses Iraqi militias of targeting US diplomatic facility in Baghdad, 14 SEPT

 Washington accuses Iraqi militias of targeting US diplomatic facility in Baghdad

The United States accused   Iraqi "militias" allied with Iran of targeting a US diplomatic facility in the capital, Baghdad, and vowed to respond. It called on  the Iraqi government to do its part to protect diplomatic facilities. Camp Victory, which houses US soldiers, west of Baghdad, was subjected to a rocket attack on Tuesday night, in an operation that came days after Iraq announced that there was no official and fixed agreement on a date for ending the international coalition’s mission and withdrawing US forces from the country.

On Friday, the US Embassy in Baghdad said in a statement that "last Tuesday, the Diplomatic Support Complex in Baghdad, a US diplomatic facility, was attacked, but fortunately no casualties were reported," stressing that "evidence suggests that the attack was launched by Iranian-allied militias operating freely in Iraq.”

The statement indicated that "the Government of Iraq has repeatedly expressed its commitment to protecting diplomatic missions, as well as US military personnel who are in the country at its invitation," renewing its call on the Iraqi government to "protect our diplomatic and coalition partner personnel and their facilities.” It added, "We reserve the right to defend ourselves and protect our personnel anywhere in the world."

The attack came hours before Iranian President Massoud Pezeshkian was due to visit Iraq, and occurred despite Iraqi forces taking tight security measures in the capital. No Iraqi faction has claimed responsibility for the attack, and the Iraqi Hezbollah Brigades, allied with Iran, called on the government to uncover the perpetrators. “Targeting Baghdad airport at this time is carried out by suspicious hands, and its aim is to disrupt the Iranian president’s visit to Baghdad, and we call on the security services to uncover those involved,” said Hezbollah Brigades military spokesman Jaafar al-Husseini.

• For its part, the Al-Fatah Alliance, an Iraqi political alliance with parliamentary and government representation that includes a number of armed factions, considered the attack "an attempt to confuse the cards and direct blame at the resistance factions." Ali Al-Fatlawi, a member of the alliance, said on Thursday that “the factions will not be afraid to declare any action they take. The attack aims to embarrass Prime Minister Mohammed Shia Al-Sudani and create a gap between the resistance factions and the government." He stressed that "the operation, in all its details, confirms that the resistance factions have nothing to do with it, neither directly nor indirectly."
• In February, bilateral talks between Baghdad and Washington resumed regarding the withdrawal of international coalition forces from Iraq, with the adoption of a "deliberate and gradual reduction", leading to the end of the mission of the international coalition forces to combat ISIS, according to official Iraqi statements. However, the Security and Defense Committee in the Iraqi parliament expected that the recent attack would push the US side to a new military response against some Iraqi factions, especially since the Americans exploit any opportunity and circumstance to target those factions.   link