Iraq
Second Review Under the Stand-By Arrangement, Requests for Waiver of Applicability, Extension of the Arrangement, and Rephasing of Access—Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Iraq.
Author: International Monetary Fund
Publication Date:
28 Mar 2011
eISBN:
9781455231096
Language:
English
Keywords:
ISCR; CR; Iraq; central government spending bill; government; private sector; SDR; U.S. dollar; Iraqi authorities; debt ratio; oil revenue; continued commitment; Oil production; Budget planning and preparation
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A financial program that aims to ensure macroeconomic stability of Iraq was discussed. The Iraqi economy was severely affected in 2009 by the decline in oil prices. Macroeconomic stability was maintained in 2010, despite a highly uncertain domestic and external environment. Policy discussions were framed by Iraq’s medium-term prospects, especially with regard to the development of its vast hydrocarbon resources. Structural reforms under the program aim at improving public financial management.

Abstract

A financial program that aims to ensure macroeconomic stability of Iraq was discussed. The Iraqi economy was severely affected in 2009 by the decline in oil prices. Macroeconomic stability was maintained in 2010, despite a highly uncertain domestic and external environment. Policy discussions were framed by Iraq’s medium-term prospects, especially with regard to the development of its vast hydrocarbon resources. Structural reforms under the program aim at improving public financial management.

I. Political and Security Situation

1. A new government was formed in late December 2010, more than nine months after the general elections. The March elections had not resulted in a clear majority for any of the main political blocs, and only after a long process of negotiations was incumbent Prime Minister Nouri Al-Maliki able to put together a new coalition government. The parties also agreed on the establishment of a new supreme council that will focus on strategic issues, but discussions on its precise composition and functions have yet to be finalized.

2. The general trend of a gradually improving security situation continues to be interrupted by episodes of sectarian violence. The recent events across the Middle East also sparked demonstrations in Iraq, with people mainly protesting the still prevailing weaknesses in the delivery of key public services, including electricity, water, health, and education, and the high rate of unemployment. Although reliable data are lacking, unemployment was estimated at about 12 percent in 2008. Actual unemployment, particularly among the younger generation, is likely to be higher, however, as a large part of the adult population has not entered the labor force.

Figure 1.
Figure 1.

Violence Indicators; April 2007–January 2011

(casualties and bombings per month)

Citation: IMF Staff Country Reports 2011, 075; 10.5089/9781455231096.002.A001

Sources: Iraq Body Count, and Brookings Institution.

II. Recent Economic Developments

3. Macroeconomic stability was maintained in 2010, despite a highly uncertain domestic and external environment. Inflation has continued to be in the low single digits and the exchange rate has remained stable. The Central Bank of Iraq (CBI) kept its policy interest rate unchanged at 6 percent, after having lowered it from 7 percent in early 2010, and the volume of foreign exchange sold by the CBI in the foreign exchange auctions remained broadly stable at about $3 billion on average per month during the year. With some increase in export revenues, the CBI’s international reserves rose to just over $50 billion by end-2010, up from $44 billion at end-2009 and exceeding the target under the SBA.

Figure 2.
Figure 2.

Iraq: Macroeconomic Indicators

Citation: IMF Staff Country Reports 2011, 075; 10.5089/9781455231096.002.A001

Sources: Iraqi Authorities, and Fund Staff estimates and projections.

4. Oil export revenues exceeded projections in 2010, with higher prices offsetting lower export volumes. Exports averaged 1.85 million barrels per day (mbpd), well below the authorities’ target of 2.10 mbpd. The shortfall reflected periods of bad weather and attacks on pipelines, as well as the lack of an agreement with the Kurdish region to secure additional exports. Export prices were substantially higher, however, averaging just over $74 per barrel during the year, compared to a budgeted price of $62.50 per barrel. Thus, oil export revenues reached $50 billion in 2010, compared to a budget forecast of $48 billion, and up from $39 billion in 2009, but still well below the peak level of $63 billion in 2008.

5. Although full-year data are not yet available, the 2010 government budget deficit is estimated to have remained well below the original forecast. Notwithstanding the somewhat higher oil revenues, this is believed to mainly reflect a large under-execution of the capital budget. Preliminary estimates suggest a 2010 deficit of about ID 10 trillion (equivalent to 10 percent of GDP), instead of the ID 18 trillion that had been projected in the 2010 budget (19 percent of GDP). While some under-execution of the capital budget had been expected given the prevailing constraints in administrative capacity, the long delay in the formation of a new government appears to have contributed to a much larger degree of under-execution. In line with this, the balance in the Development Fund for Iraq (DFI) at end-2010 exceeded the (adjusted) target under the SBA by almost $4 billion.

6. The end-December 2010 performance criteria for which data are available were met. The authorities are requesting waivers of applicability of the end-December 2010 performance criteria for the central government budget deficit and the central government current spending bill, for which data is still pending, but for which there is no evidence that these were not observed. All but one of the end-June performance criteria were observed.

III. Policy Discussions

7. The discussions for the second review focused on speeding up Iraq’s reconstruction, including the rebuilding of key economic institutions, while maintaining macroeconomic stability. The authorities stressed that the new government will maintain the same direction of economic policies as its predecessor and that they will continue to press ahead with the policies agreed under the SBA. To underline their commitment to sound fiscal and monetary policies, and recognizing that the implementation of many of the structural reform measures will require more time given the still large capacity constraints, the authorities request an extension of the SBA through mid-2012.

8. Policy discussions were framed by Iraq’s medium-term prospects, especially with regard to the development of its vast hydrocarbon resources. Oil production is set to increase substantially over the coming years, as the international oil companies that were awarded development contracts have started their operations. Even so, in the near term, the increase in exports will be constrained by existing oil infrastructure bottlenecks, including aging pipelines and export terminals, and limited storage capacity. Several projects are already underway or planned to increase Iraq’s export capacity in the coming years, and Iraq’s medium- to long-term prospects therefore continue to look strong.

Medium-Term Outlook in Iraq’s Oil Sector

In late 2010, the government announced an increase in Iraq’s proven oil reserves from 115 billion barrels to 143 billion barrels, based on new geological studies. This brings Iraq to second place behind Saudi Arabia in terms of size of proven reserves.

Oil production is projected to increase considerably over the medium- to long-term, following the successful bid rounds in June and December of 2009 that resulted in eleven development contracts with international oil companies. Based on the production plans presented by the companies, oil production could increase from 2½ mbpd to close to 13 mbpd in the next seven years.

While these production goals could be feasible in the longer term, the main risks in the coming years will be bottlenecks in the export infrastructure that will need to be addressed. The authorities are working to upgrade and expand the country’s oil infrastructure. Additional single point moorings are planned at the Basra oil terminal, as well as additional pipelines to the terminal, which is Iraq’s largest point of export. Plans also include the construction of new domestic pipelines to connect the southern fields to the northern pipeline to Turkey, and a new pipeline to Syria. In addition, large investments in supporting activities are also underway and planned, including the construction of desalination plants to produce water for injection in the fields, and storage facilities. These investments will require time to implement, and suggest a more gradual increase in Iraq’s oil production. Based on more conservative assumptions for the time it will take to expand Iraq’s export capacity, oil production could still increase to over 5 mbpd by 2017.

uA01fig01

Crude Oil Production Scenarios (in Mbpd)

Citation: IMF Staff Country Reports 2011, 075; 10.5089/9781455231096.002.A001

Sources: Iraqi Authorities; and Fund Staff estimates and projections.

A. Fiscal Policy

9. The 2011 budget aims to accelerate investment in public services and in oil infrastructure, as well as to accommodate additional social safety net and security outlays, while remaining consistent with medium-term fiscal sustainability and available financing. Iraq’s rehabilitation needs remain large, particularly to improve public service delivery and rebuild essential infrastructure, which are critical also to help create a private sector that can provide sufficient employment opportunities to the country’s large labor force. The authorities therefore aim to accelerate the pace of investment in 2011 to make up for the delays in 2010, while recognizing the constraints posed by the limited implementation capacity. Large investment outlays are also envisaged for the oil sector, including payments to the international oil companies for recovery of their costs and investments.1

10. Besides a sharp increase in investment, the 2011 budget also envisages an increase in current spending. While current spending has been nearly constant in nominal terms over the last three years, the increase in 2011 is largely stemming from higher security outlays, as Iraq becomes increasingly responsible for its own internal security as U.S. forces continue to be withdrawn, plus the higher costs of the in-kind Public Distribution System (PDS)—which is still the main social safety net—as a result of the higher world food prices.2 The authorities also needed to implement an increase in teachers’ salaries that had been previously approved, but the implementation of which had been postponed due to the difficult fiscal situation.

11. As in previous years, the 2011 budget is based on a conservative assumption for oil revenues. While the budget is based on an oil export volume assumption of 2.2 mbpd that is ambitious in light of Iraq’s current export capacity, the risk of export volumes falling below this level, as well as the risks posed by the large volatility in world oil prices, are balanced by a conservative export price assumption of $76.50 per barrel for Iraq oil.3 Based on these two assumptions, the 2011 budget projects an increase in oil export revenues to about $61 billion.

Figure 3.
Figure 3.

Average Petroleum Spot Price, January 1, 2008–March 2, 2011

(U.S. dollars per barrel)

Citation: IMF Staff Country Reports 2011, 075; 10.5089/9781455231096.002.A001

Sources: Bloomberg

Iraq: Government Finances 2008–14 1/

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Sources: Iraqi authorities; and IMF staff estimates and projections.

Oil-related public enterprises included on net basis.

Includes statistical discrepancy.

2010-12 projections include IMF SBA and World Bank DPL disbursements.

12. The projected 2011 budget deficit can be financed. Financial resources, including from the Fund, that the authorities had expected to use in 2010 are still available and can be used to finance the larger 2011 deficit. In this context, as financing needs shifted from 2010 to 2011, the authorities request a rephasing of remaining disbursements under the SBA, with the bulk of the financing to become available in late 2011, if and when needed. As in the first year of the SBA, in the event that actual oil revenues significantly exceed projections, or if the capital budget is expected to be considerably under-executed—both to be assessed at the time of the fourth program review—the authorities would at that time treat the SBA as precautionary.4

Disbursement Profile (in millions of SDRs)

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13. The budget deficit is projected to narrow substantially in 2012 and to move back into surplus in the following years. Over the medium-term, and even with more cautious assumptions regarding the increase in oil production than those presented in the oil companies’ production plans, Iraq’s government finances would reach a sustainable position. Fund staff will provide assistance to the authorities to help model the implications of the agreements with the international oil companies on government finances, as a key input for developing a medium-term fiscal framework. The authorities plan to meet with line ministries in the spring of 2011 and, with the assistance of the Bank and the Fund, build a medium-term budget strategy aligning policy priorities and expenditure envelopes. This would translate into budget ceilings for line ministries that will be included in the budget circular for the preparation of the 2012 budget.

B. Monetary and Exchange Rate Policy

14. The authorities remain committed to ensuring the independence of the CBI. A ruling by Iraq’s Federal Supreme Court also noted that while the CBI is part of the country’s executive apparatus, it is by law independent in its decisions and operations.

15. The CBI will continue to aim at keeping inflation low, predominantly by maintaining a stable exchange rate. The low level and the relative stability of inflation do not suggest any significant over- or undervaluation of the Iraqi dinar. Also, a stable exchange rate continues to provide a solid anchor for the public’s expectations in an otherwise highly uncertain environment and in an economy with a very low level of financial intermediation. Meanwhile, the CBI will continue to keep its policy interest rate positive in real terms. To enhance mobilization of domestic financing, limitations on state-owned banks’ use of government deposits for investing in Treasury bills have been reduced, while the pension fund has also been allowed to invest in Treasury bills and to participate in auctions directly.

C. Structural Reforms

16. Structural reforms under the program aim at improving public financial management, strengthening governance in the oil sector, and developing the financial sector. Improving public financial management remains critical to ensure the effectiveness of government spending, including the delivery of social services. Priority areas include improving budget preparation, the accounting and reporting framework, and cash management. Enhancing oil sector governance is key to maximizing resources devoted to reconstruction and social areas, and aims at maintaining a transparent single oil revenue account once the DFI ends, completing oil sector metering, and reconciling physical oil flows with financial flows. Financial sector reforms are important to provide basic financial services to Iraqi citizens, including private sector lending, and aim at developing a revitalized and competitive banking sector, including by restructuring the two main state-owned banks.

17. Progress in the last six months in implementing structural reforms has been uneven. This largely reflects the still severe capacity and security constraints, which also hamper the effective delivery of technical assistance, but also insufficient coordination and cooperation between government entities that was aggravated by the political transition process. Progress has been strongest in those areas that only involve a single institution and where external assistance has been provided. Progress has been much weaker in areas that require several institutions to work together or where external assistance has been lacking.

18. Progress is strongest in the area of strengthening program safeguards:

  • In January 2011, an external auditor completed special audits of the CBI’s net international reserves (NIR) and net domestic assets (NDA) for end-June 2010, which included a review of the operations of the Memorandum of Understanding between the CBI and the Ministry of Finance with regard to IMF disbursements and debt service obligations and the operational controls over government accounts held at the CBI (a benchmark for end-October 2010). These audits found only marginal variances in the numbers, but also that the Ministry of Finance did not have documented procedures for its accounts with the CBI. The Ministry of Finance and the CBI are now working to establish protocols for accessing government accounts at the CBI.

  • The CBI has appointed an international audit firm to conduct the audit of its 2010 financial statements. The CBI will provide staff with the draft 2010 audited CBI financial statements and draft management letter (a new benchmark for end-May 2011). The auditor will also conduct special audits of the CBI’s NIR and NDA as of December 31, 2010 (also a new benchmark for end-May 2011).

  • To address remaining safeguards risks that were identified in the safeguards assessment update the CBI’s internal audit committee now has a majority nonexecutive membership and operates with a terms of reference in line with Fund recommendations (a benchmark for end-October 2010). In addition, the CBI is currently in the process of selecting a reputable accounting firm to review and assist with strengthening its internal audit function (a benchmark for end-December 2010).

  • The CBI and the Ministry of Finance amended the Memorandum of Understanding governing financial relations with the Fund to delegate to the CBI the authority to appoint its external auditors and to include a provision that requires the Ministry of Finance to issue promissory notes payable on demand to the Fund promptly following each disbursement under the program.

19. Strengthening public financial management is proceeding, albeit slowly:

  • The review of all bank accounts in the banking system that were classified as central government accounts is nearly completed (a benchmark for end-March 2010). The ownership of almost 90 percent of these accounts (which totaled almost ID 30 trillion at end-June 2010) has been clarified. Accounts totaling close to ID 11 trillion belonging to the central government have been largely reconciled with Ministry of Finance records. Of the accounts identified as belonging to public entities outside the immediate central government sector, only a handful were sizable, belonging to the pension fund and a number of state-owned enterprises and trading companies. The remainder includes a very large number of relatively small accounts belonging to agencies and institutions that are (partially) self-funded and work at arm’s length from the government. Similarly, the accounts yet to be clarified also appear to comprise a large number of small accounts, of which many are held at regional branches of the two state-owned banks with whom communication has proven difficult. The authorities are continuing to evaluate these accounts to determine whether any funds can be returned to the main treasury account.

  • The Ministry of Finance has been gathering information on the outstanding stock of advances (a benchmark for end-September 2010). While some progress has been made, a number of line ministries have yet to report. The authorities aim to complete the inventory by end-May 2011. In the meantime, the Ministry of Finance will request the Board of Supreme Audit (BSA) to review the outstanding advances to determine whether these should be closed with the funds returned to the budget.

  • The reviews of government bank accounts and the stock of advances clearly show the need to move toward introducing a single treasury account (STA). The authorities share this view. As a first step of moving ahead with what will be a lengthy process, staff of the Fund and the Bank will assist the authorities with advancing the process for establishing a Financial Management and Information System (FMIS), an important step in the process of moving toward a STA, by helping to determine a set of core functionality requirements (a new benchmark for end-May 2011). As a transition to a STA, the authorities also plan, with the assistance of Fund technical assistance, to streamline cash management in the short run already by granting a larger role to the CBI in the Treasury’s banking arrangements and thus to reduce outstanding cash balances (a new benchmark for end-June 2011).

  • The Ministry of Finance has completed the new accounting manual, but its distribution to all spending units (a benchmark for end-December 2010) is pending the completion of a review of the manual by the BSA. The authorities will distribute the manual as soon as it has been approved by the BSA.

  • A review of a number of large 2008 investment projects has yet to be started (a benchmark for end-September 2010). The authorities noted that the review, which would aim to distill lessons on how to enhance the quality of future investment projects, will need to be carried out by the BSA. The review will be conducted during 2011, with the World Bank providing assistance to the BSA to enhance its capacity, aiming for completion by end-October 2011.

  • The final fiscal accounts for 2009 are expected to be submitted shortly to the BSA, after errors in some ministries’ data submissions have been corrected (a benchmark for end-September 2010). The publication of the 2005–07 audited fiscal accounts (a benchmark for end-March 2010) is awaiting approval by parliament.

  • The census of civil servants is still not completed, suffering from a lack of cooperation from a number of line ministries (a benchmark for end-September 2010). The authorities are considering options to ensure full cooperation from line ministries.

Commercial Bank Deposits of the Central Government and Public Institutions

(June 30, 2010; in trillions of Iraqi dinars)

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Sources: Iraqi Ministry of Finance and Central Bank of Iraq.

20. Progress continues to be made in improving transparency in the oil sector:

  • The authorities continue to move ahead with the installation and calibration of oil metering systems, both at the export terminals and at key transfer points in the domestic network. All exports via the Basra oil terminal and the Ceyhan pipeline are metered, accounting for over 95 percent of Iraq’s oil exports. Completing the installation of domestic metering systems (a benchmark for end-December 2010) will require more time, given the large number of transfer points. The process is nearly half-way completed and is expected to be fully completed by end-2011.

  • The DFI and associated immunities were extended by the UN Security Council to end-June 2011. The authorities remain committed to establishing a successor mechanism that includes a single oil revenue account that would be subject to the same principles of accountability and transparency as currently apply to the DFI. In the meantime, the authorities continue to make progress in addressing remaining claims and liabilities from the Saddam-era and will ensure that they maintain appropriate legal counsel to handle any further claims that may emerge (a new continuous structural benchmark).

  • As noted above, the authorities are working with staff to model the implications of the agreements with the international oil companies on government finances.

21. Efforts are also underway to clean up the balance sheets of the two largest state-owned banks:

  • The Bank Reconciliation Unit (BRU), with assistance from an external audit firm and Fund staff, is moving ahead with removing Saddam-era external liabilities from the balance sheets of Rafidain and Rasheed that were recognized by the government as external debt in the context of Iraq’s external debt restructuring. The BRU will also propose a course of action for the remaining external liabilities and non-performing loans to defunct state-owned enterprises.

22. Data weaknesses remain. While the authorities continue with their efforts to improve data standards, data become available only with long lags, due to capacity constraints and security issues. This complicates effective monitoring and analysis.

IV. Staff Appraisal

23. The authorities have been successful at maintaining macroeconomic stability under very difficulties circumstances. Although fiscal end-year performance criteria cannot yet be assessed due to the long data lags, macroeconomic policies appear to have been on track. Macroeconomic stability is one of the key conditions for the development of a vibrant economy that can provide sufficient employment opportunities for Iraq’s large labor force. Thus, the authorities’ continued commitment to maintaining sound fiscal and monetary policies is to be welcomed

24. Staff supports the CBI’s policy of managing the exchange rate of the Iraqi dinar to keep inflation low. A stable exchange rate continues to provide a solid anchor for the public’s expectations in an otherwise highly uncertain environment. Over time, rising oil revenues could put upward pressure on the real exchange rate, which would warrant allowing greater exchange rate flexibility. Staff also welcomes the authorities’ continued commitment to safeguard the independence of the CBI, which is critical for maintaining confidence in the Iraqi dinar.

25. The 2011 budget appropriately balances the need to accelerate Iraq’s reconstruction with the need to return to a sustainable fiscal position in the coming years. Much remains to be done to improve public service delivery and rebuild and expand essential infrastructure, including in the oil sector. The authorities, however, will also need to ensure the quality of the capital spending, and the investment review would help in this regard. The 2011 budget deficit can be financed and, with the projected increase in oil production, the budget is projected to gradually shift back to a surplus position—especially if oil prices remain around current levels—in the coming years. This will allow the authorities to rebuild financial buffers. In this regard, the authorities will need to start work on creating a sound institutional framework for managing Iraq’s sovereign wealth in the longer run.

26. Efforts to rebuild key economic institutions, including those needed for private sector development, and to improve governance will need to be accelerated, however. Progress is hampered by the severe capacity constraints, and complicated further by the fragile, albeit gradually improving, security situation, which also hampers the effective delivery of technical assistance. Concerted strong efforts by the authorities and the international community are needed to speed up the reform process, including improved coordination and cooperation between the various government entities. Efforts are also needed to improve the quality and timeliness of economic data, as weaknesses hamper analysis and policy formulation.

27. While Iraq’s prospects are positive, risks remain large. Risks and uncertainties continue to cover a broad range, from political instability and a deteriorating security situation, to delays in the development of Iraq’s oil fields and volatility in oil prices.

28. Staff recommends that the second review under the SBA and the financing assurances review be completed. Staff believes that the program remains on track, particularly given the strong macroeconomic performance and despite the uneven progress in the implementation of structural reforms. The authorities remain strongly committed to the program, as demonstrated by the policies and measures described in the attached Letter of Intent. In this regard, staff recommends the approval of the requested waivers of applicability. Staff also supports the authorities’ request for an extension of the arrangement, as the longer time frame would allow for the implementation of the large structural reform agenda, as well as their request for a rephasing of the remaining disbursements as they would be better attuned to Iraq’s financing needs and contribute to an improved capacity to repay. Staff furthermore believes that Iraq continues to make best efforts to reach bilateral agreements on its arrears to non-Paris Club creditors and that the authorities have been negotiating in good faith to resolve the remaining arrears to private creditors, consistent with the Fund’s policy on lending into arrears.

Table 1.

Iraq: Selected Economic and Financial Indicators, 2008–12

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Sources: Iraqi authorities; and Fund staff estimates and projections.

A new CPI and core price index was introduced in 2010, based on the 2006/07 household survey. The new core price excludes fruits and vegetables, and fuels.

2008 includes expenditures of 11.4 percent of GDP (ID 12.4 trillion) that are outstanding as advances and letters of credit and that have been reclassified mostly as investment spending.

Assumes a debt reduction in 2011 by non-Paris Club official creditors, comparable to the Paris Club agreement.

Required reserve ratios were reduced to 25 percent in 2009 (from 75 pecent), and further reduced to 20 percent in April 2010.

Table 2.

Iraq: Fiscal Accounts, 2008–12

(In trillions of ID; unless otherwise indicated)

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Sources: Iraqi authorities; and Fund staff estimates and projections.

For the program columns (EBS/10/28 and EBS/10/182), revenues and expenditures of the oil-related enterprises have been subtracted from the total reveneue and expenditure, leaving only the net transfer to the budget. This ensures comparability to the new presentation going forward.

For 2010, includes $850m in oil bonuses and $200m in 2011.

Include goods and services financed by donors, including overhead costs for reconstruction projects.

Calculated as 5 percent of oil exports as per U.N. Security Council Resolution 1483 to finance war reparations to Kuwait.

LCs in the Trade Bank of Iraq, full down-payment is customarily required. 2008 LCs and advances to suppliers were re-classified.

Includes the $500m in soft loans from oil companies obtaining licenses for 2010, the IMF 2010-11 SBA disbursements and a $500m WB loan under the DPL.

Table 3.

Iraq: Fiscal Accounts, 2008–12

(In percent of GDP)

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Sources: Iraqi authorities; and Fund staff estimates and projections.

For the program columns (EBS/10/28 and EBS/10/182), revenues and expenditures of the oil-related enterprises have been subtracted from the total reveneue and expenditure, leaving only the net transfer to the budget. This ensures comparability to the new presentation going forward.

For 2010, includes $850m in oil bonuses and $200m in 2011.

Include goods and services financed by donors, including overhead costs for reconstruction projects.

Calculated as 5 percent of oil exports as per U.N. Security Council Resolution 1483 to finance war reparations to Kuwait.

LCs in the Trade Bank of Iraq, full down-payment is customarily required. 2008 LCs and advances to suppliers were re-classified.

Includes the $500m in soft loans from oil companies obtaining licenses for 2010, the IMF 2010-11 SBA disbursements and a $500m WB loan under the DPL.

Table 4.

Summary of Oil Company Operational Accounts

(In trillions of Iraqi dinars)

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Source: Iraqi authorities

There are 16 oil sector companies: Northern Oil Company, Maysan Oil Company, Southern Oil Company, Oil Exploration Company, Iraq Oil Tanker Company, Iraq Excavation Company, Oil Products Distribution Company, Oil Pipelines Company, Gas Bottling Company, Al Wasit Refineries Company, Northern Refineries Company, Southern Refineries Company, Southern Gas Company, Northern Gas Company, Oil Projects Company, Oil Marketing Company. Maysan Oil Company was a new company set up in 2009.

Actual data is through October.

Table 5.

Iraq: Central Bank Balance Sheet 2008–11

(In billions of Iraqi dinars, unless otherwise indicated)

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Sources: Iraqi authorities; and Fund staff estimates and projections.

Valued at market exchange rates.

This mainly represents the ID and US$ overnight standing deposit facilities and CBI bills.

Table 6.

Iraq: Monetary Survey, 2008–11

(In billions of Iraqi dinars, unless otherwise indicated)

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Sources: Iraqi authorities; and Fund staff estimates and projections.
Table 7.

Iraq: Balance of Payments, 2008–15 1/

(In millions of U.S. dollars, unless otherwise indicated)

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Sources: Iraqi authorities; and Fund staff estimates and projections.

Excludes U.S. military spending in Iraq.

UN Oil for Food Program is excluded from the table because transactions ceased in 2009.

Includes interest accrued, deferred, and capitalized.

Reflects the increase in liabilities associated with the SDR allocation of $1.7 billion in 2009.

Based on Paris Club agreement, the payments of principal and most interest during 2006–10 are deferred and capitalized.

Includes errors and omissions for historical data.

Estimates of accrued interest on existing stock of debt prior to the implementation of the Paris Club agreement.

Includes debt forgiveness and clearance of arrears on multilateral debt and arrears related to fuel imports from Turkey.

The notional debt forgiveness and amortization reflect: (i) the first stage of debt reduction (30 percent) at end 2004; (ii) the second stage reduction (30 percent) at end-2005; and (iii) the settlement of debt owed to private creditors through cash and debt exchanges. Assumes debt reduction comparable to the Paris Club agreement on other debt to official creditors.