Posted on 08/17/2005 1:29:16 PM PDT by the anti-liberal
WASHINGTON, Aug 16 (Reuters) - The International Monetary Fund on Tuesday, in its first economic review of Iraq in 25 years, said insurgent violence had dampened the country's growth prospects and tied up funds meant for reconstruction.
The IMF gave Iraq a $436 million emergency loan last year to help rebuild the economy after decades of dictatorship, a U.S.-led war and an insurgency spawned unemployment and decay.
In its Article IV review, a step toward a new lending program for Iraq, the IMF said security problems had stalled efforts to rebuild the fragile Iraqi economy.
"Violence has deterred trade and investment flows," the global lender said in the consultative review, its first official assessment of the Iraqi economy since February 1980.
"The lack of a secure environment has also impeded the effectiveness of reconstruction spending, with contractors and donors reporting security and insurance outlays in the range of 30-50 percent of total costs," it said.
Iraq's growth prospects are closely tied to its oil sector, which accounts for three quarters of the economy, according to IMF estimates.
The global lender said an oil production rebound spurred a 46.5 percent increase in Iraq's gross domestic product in 2004. This year, however, it forecast the economy would grow just 3.7 percent as production has leveled off.
"We have had to revise down the projection for growth in 2005," said Adam Bennett, assistant director of the IMF's Middle East and Central Asia Department. "It has been harder to proceed with reconstruction, including in the oil sector, than we had anticipated."
Still, the IMF said it expected growth to regain speed in 2006 and 2007 as oil production rebounds.
"Iraq's medium term outlook appears satisfactory as long as expansion in oil production proceeds without undue interruption and world oil prices remain at favorable levels," the IMF said in a staff report accompanying the review.
It warned, however, that conditions in the non-oil sector remain precarious because of security problems, electricity shortages and poor communications.
SLOW RECONSTRUCTION
The IMF said the international community needed to boost aid to help Iraq build its political and economic capacity, and warned reconstruction delays had made disbursements from to a U.N. and World Bank managed fund woefully slow last year.
"Grant-financed reconstruction expenditure in 2004 fell significantly short of expectations," the IMF said.
"Although donors to the International Reconstruction Fund Facility for Iraq deposited about $1 billion into this facility, only about $103 million were disbursed to finance projects in 2004."
To become economically stable, Iraq needs to secure further debt relief, the IMF said. It urged the country to seek reconciliation with both private and government creditors, including in the Gulf region, as soon as possible.
In the review, the lender noted Iraqi authorities were keen to secure a new IMF loan deal by the end of 2005.
"Progression to a standby arrangement would help underpin a sound macroeconomic framework for the continuation of Iraq's reconstruction and recovery," the fund said, noting a new deal could help Iraq secure more debt relief.
The IMF declined to comment on the size or character of a new lending agreement with Iraq, but said it would discuss possibilities with Iraqi authorities later this year.
In the meantime, the IMF urged Baghdad to pursue reforms, including efforts to root out corruption and improve fiscal oversight and oil management. It also recommended Iraq repeal domestic subsidies on petroleum products to free up revenues worth as much as 30 percent of GDP.
Talks between Iraqi officials and financial institutions like the IMF and World Bank have taken place outside the country since both withdrew their staff from Baghdad in 2003 after the bombing of the U.N. headquarters there.
The IMF said it conducted its review with Iraqi officials by teleconference and videoconference, and also held face-to-face meetings in cities in the Middle East and Europe.
Gotta love 'multinational' institutions.
Hey Reuters, you need to check with the AP.
Wasn't it just reported that Iraq's oil production is at or exceeding pre-war level ?
Something has to be working there.....
I would like all reporters to explain to me how Jordanian, Syrian, Egyptian, Pali, Saudi and Iranian invadors of Iraq, who - it's confirmed - have murdered more Iraqis than coalition forces, can be called "insurgents"
Either oil flows hasn't caught up with the IMF, or the IMF hasn't caught up the the oil flows..
...and nearly Anything can/wll work whenever Our Troops are Protecting/Commanders supervising, etc.
INSURGENT. One who is concerned in an insurrection. He differs from a rebel
in this, that rebel is always understood in a bad sense, or one who unjustly
opposes the constituted authorities; insurgent may be one who justly opposes
the tyranny of constituted authorities. The colonists who opposed the
tyranny of the English government were insurgents, not rebels.
I agree that the term is repeatedly misapplied in the case of terrorism, either in Iraq or elsewhere, as the essence of the activity is essentially the same, be it in London, Spain, Iraq, or Saudi Arabia- to make a distinction between that activity in Iraq and that same activity elsewhere is, IMO, mistaken.
The media hasn't changed the technique since Hitler's propaganda machine perfected it.
I would like to see an American journalist, for example, speak from the point of view of and as an American rather than pretend to speak from a point of view bereft of nationality or perspective. IMO.
Dateline WASHINGTON, DC. Yeah, great freakin reportage, here, huh? Can you believe as much as one damn word?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.