Debt

  • Update on compensation payments for Kuwait (27 Oct 2006)

    Article in the Independent newspaper on Iraq's continuing payments towards Kuwait in compensation for the first gulf war.

  • Iraq returns to financial markets (03 Jan 2006)

    Iraq is to issue $2bn worth of bonds in order to raise money to pay off its remaining debts to various private sector lenders.

  • IMF Approves Stand-By Arrangement for Iraq (23 Dec 2005)

    The Executive Board of the International Monetary Fund (IMF) approved the institution's first-ever Stand-By Arrangement for Iraq, which is designed to support the nation's economic program over the next 15 months. A pdf file containing a report by IMF staff completed endorsing the SBA request, an Appendix containing documents from the Iraqi government in support of their SBA request, a supplemental report by IMF staff indicating that Iraq had enacted the remaining pre-conditions to the SBA, and a statement by Iraq's Executive Director at the IMF is now available. The main elements of the reports are:

    • the SBA allows Iraq to draw on 40% of its IMF quota in the event of a crisis; Iraqi authorities plan not to use this right;

    • the SBA runs until March 2007

    • in return for this facility, Iraq accepts a number of quantitative performance criteria and targets (p. 29, Table 11) centred on fiscal stability as well as a number of qualitative structural performance criteria and benchmarks (p. 31, Table 13) centred on central bank operations, government statistics (including audits thereof) and the development of the banking sector, largely by implementing modern clearing systems between the CBI and commercial banks.

    • approval of the SBA triggers the second 30% reduction of Paris Club debt. The IMF staff still regard Iraqi debt as 'unsustainable'; with the third reduction (to occur if Iraq undergoes three years of programmes like the SBA) it becomes 'sustainable'

    • the document reports on Iraqi economic and governance performance

    None of the ongoing criteria or targets listed above relate directly to petroleum product subsidies. That which seems to bear on this most closely is the floor on revenues from oil related enterprises (Table 11). This would see ID3,250bn (US$2.2bn) raised over 2006, compared to ID900bn (US$600mn) over 2005. To put this in perspective, the 2006 target is a bit less than what the Iraqi government has been spending annually to import refined products.

    In December 2005, as a 'prior action', the Iraqi government did reduce subsidies on a number of petroleum products. The price schedule is displayed in Table 6 (p. 24), which includes an average of prices in the Gulf. These are listed as the IMF staff "urge" Iraq (p. 10, para. 21) to align domestic prices to this average by 2007; the strategy of Iraqi authorities is to further increase prices on a quarterly basis.

    There is almost no discussion about how these prices rises are expected to influence Iraqi society: no information is presented on who currently benefits from the subsidies, in part as this is probably not known - a household income and expenditure survey is only expected to be ready by the end of 2006 (p. 15, para. 39). Thus, steps are mentioned to offset the disruption that will be caused - better control over ration expenses, a 'safety net' equal to one third the savings gained from subsidy reductions targetted at the million poorest households (p. 11, para. 25) - but no further details are provided.

  • Paris Club Iraq Debt Treatment (21 Nov 2004)
  • Jubilee Iraq

    UK-based organisation campaigning for reduction of Iraq's external debts. Their website contains more information resources about Iraq's debt situation.