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Baghdad will keep fuel subsidies in place while working with the IMF to improve financial management.
The Iraqi government has no plans to lift subsidies on fuel and oil products as part of negotiations to secure a loan from the International Monetary Fund (IMF), a government adviser said, dismissing local newspaper reports on a possible reduction in energy subsidies.
Mazhar Mohammed Saleh, the government's adviser for economic affairs, said that Iraqi authorities had agreed to a Staff-Monitored Program (SMP) in November to monitor Iraq's economic policies, paving the way for a funding program in 2016.
"Under the program, the IMF will provide loans and assistance to Iraq to cover the (budget) deficit. There will be further talks on the subject in the second half of December. It is totally untrue that the IMF requested the lifting of oil subsidies," Saleh told Zawya.
Ali Al Allaq, governor of the Central Bank of Iraq, told Zawya that the actual value of the IMF loan has yet to be determined. Saleh had told Zawya in November that Iraq would start discussions with the World Bank and the IMF to secure loans worth USD 6 billlion.
The IMF said in a statement in November that under the SMP, Baghdad would aim to contain public spending and reduce the country's deficit. It said agreement has also been reached on measures to strengthen public financial management, anti-money laundering and countering the financing of terrorism, as well as financial sector stability.
Saleh noted that the Iraqi parliament had already approved a law to combat money laundering and terrorism and had amended the investment law of 2010.
The decline in crude oil prices and the costs of battling Islamic State militants have strained state finances in the oil producer.
Iraq's 2016 draft budget forecasts expenditure of IQD 106.9 trillion (USD 95 billion) and a deficit of IQD 23.5 trillion deficit, planning ministry spokesman Abdel Zahra Al Hindawi told Zawya last month. He said the budget include IQD 29.5 trillion in spending for the government's investment plan and IQD 77.5 trillion to support government operating expenses.
© Zawya 2015
