TLTP
\nWASHINGTON
\nIraq\u2019s government needs to implement a slew of structural reforms to foster inclusive growth and emerge stronger from the pandemic, as the economy is forecast to shrink 11 per cent this year, the worst contraction in 17 years, because of lower oil output, according to the International Monetary Fund.
\nThe sharp decline in oil revenue is expected to widen the country\u2019s fiscal and external account deficits to 20 per cent and 16 per cent of gross domestic product respectively, the Washington-based lender said on Sunday following a month-long series of talks with Iraqi authorities.
\nThe IMF called on Iraqi authorities to implement wide-ranging structural reforms to strengthen public finances to meet critical health and social expenditure needs, reform the electricity sector, fight corruption and expand institutional capacity.
\n\u201cThe fallout of the Covid-19 pandemic and the sharp decline in oil prices and output have aggravated Iraq\u2019s economic vulnerabilities,\u201d Tokhir Mirzoev, the IMF official who led the mission, said. \u201cA decisive recalibration of near-term economic policies will be critical to ensure macroeconomic stability and protect the vulnerable.\u201d
\nIraq, Opec\u2019s second-largest producer, is highly reliant on oil revenue to meet 90 per cent of government expenditure, including $5 billion spent on monthly salaries for public servants. That leaves the government with difficult decisions that could raise the prospect of further civil strife.
\nThe country has 573,622 Covid-19 cases, with the death toll reaching 12,565 as of Sunday, according to Worldometer, which tracks the spread of the virus globally. Some 505,669 have recovered.
\nThe IMF called for a comprehensive package of economic policies to overcome the health crisis as a top priority and to reduce the fiscal and external deficits.
\nIn the next phase of the pandemic, additional fiscal resources will be needed to address the crisis, including the ability to buy and distribute the vaccine widely.
\nReducing the fiscal and external imbalances will also be critical in relieving financing constraints and ensuring debt sustainability, while safeguarding international reserves, the IMF said.
\nIraq\u2019s 2021 budget should target areas of \u201cfiscal vulnerability\u201d, mainly reversing the \u201cunsustainable expansion of wage and pension bills, reducing inefficient energy subsidies, and raising non-oil revenues\u201d, Mr Mirzoev said.
\nProtecting vulnerable segments of the population will be of \u201cparamount importance\u201d and requires significantly boosting targeted cash transfers and expanding their coverage, as well as improving other parts of the social safety net, he said.
\n\u201cUncertain medium-term oil market prospects and strong population growth further raise the urgency of advancing the reform agenda,\u201d Mr Mirzoev said.
\nIn the finance sector, a \u201cdecisive\u201d strategy is needed to reform large state-owned banks and level the playing field, he said. This will allow private sector development and secure financial stability.
\nStronger governance controls, better supervision and an international audit of these large state-owned banks are important to provide options for their restructuring, he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
TLTP WASHINGTON Iraq\u2019s government needs to implement a slew of structural reforms to foster inclusive growth and emerge stronger from the pandemic, as the economy is forecast to shrink 11 per cent this year, the worst contraction in 17 years, because of lower oil output, according to the International Monetary Fund. The sharp decline in […]<\/p>\n","protected":false},"author":2,"featured_media":116751,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-161842","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"yoast_head":"\n