IMF approves $685m loan for Iraq
Updated: 2005-12-24 11:13
The International Monetary Fund approved a new $685 million (euro577.62
million) loan for Iraq, giving the country a critical endorsement of its
The loan, approved Friday by the lending institution's 24-member executive
board, represents the IMF's seal of approval that the Iraq government is taking
the proper approach to reviving its wartorn economy. The loan should open the
door to more funding from countries that want to participate in Iraq's
"The Iraqi authorities were successful in promoting macroeconomic stability
in 2005, despite the extremely difficult security environment," IMF Deputy
Managing Director Takatoshi Kato said in a statement announcing the agreement.
The $685 million (euro577.6 million) loan will cover a 15-month period and
was awarded under regular IMF procedures to provide assistance to nation's
facing economic difficulties. It followed a $436.3 million (euro367.9 million)
emergency post-conflict loan that the IMF awarded Iraq in September 2004.
The Bush administration, which is counting on the IMF and World Bank to
supply a significant portion of the funds needed for Iraq reconstruction,
applauded the IMF loan deal.
"This arrangment will underpin economic stability and help lay the foundation
for an open and prosperous economy in Iraq," Treasury Secretary John Snow said
in an announcement.
The loan deal was achieved after months of bargining between the IMF and the
It clears the way for wealthy creditor countries to begin implementing a debt
relief program for Iraq that would reduce by 80 percent Iraq's $38.9 billion
(euro32.8 billion) in foreign debt held by members of the Paris Club.
In September 2004, the Paris Club, the umbrella group of wealthy countries
including the United States that bargains with debtor nations, had announced the
debt relief agreement, but it could not go into effect until Iraq and the IMF
reached agreement on a loan program.
The Bush administration last year announced it would forgive 100 percent of
the $4.1 billion (euro3.5 billion) in debt Iraq owed the United States.
The IMF statement said that the Iraqi government planned to allocate
resources in 2006 to expanding oil production as part of an economic program
aimed at getting the economy into better shape by boosting growth and
US President George W. Bush has been giving a series of speeches on Iraq to
bolster sagging support for the U.S.-led effort which has had to confront
widespread insurgent attacks.
Private economists have said that the new government will have little
prospect of achieving its economic goals until the security situation is brought