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Iraq's campaign against Islamic State is costing $7 billion a year, a state advisor said.
Iraq will seek loans of about $20 billion over the next three years to rebuild its infrastructure and carry out development projects, following an agreement with the International Monetary Fund (IMF) that is up for approval in June, a government advisor said.
Mathhar Mohammad Saleh, economic adviser to the Baghdad government, told Zawya last week that Iraq would seek loans from the IMF, World Bank and the Islamic Development Bank to cover the costs of fighting militant group Islamic State amid the sharp decline in crude prices that has hit the revenues of the oil exporting country.
"Iraq is seeking loans of $20 billion, as war losses amount to $7 billion per year, which constitutes 3 to 5 percent of gross domestic product," he said. "The loans would be on the basis of 36-month credit Stand-By Arrangement, on condition of making reforms in the financial system in Iraq and issuing a law on integrity that is in line with U.N. standards," Saleh said.
Iraq reached a $5.4 billion standby agreement with the IMF that could unlock $15 billion more in international assistance over the next three years, Finance Minister Hoshiyar Zebari was quoted as saying last month by Reuters. He said Iraq planned to sell $2 billion in international bonds in the last quarter of 2016 to reduce the cost of borrowing.
The agreement requires approval of the IMF board, which meets in June, and a decision is due at the end of June or in July, an IMF official said.
Reconstruction costs
Iraq, which relies on oil exports for 80 percent of revenues, is facing a deficit of $25 billion out of a budget of around $100 billion. The fiscal woes have been aggravated by the campaign against Islamic State militants, who seized nearly a third of Iraq's territory last year.
A planning ministry spokesman said the campaign against Islamic State has cost the state nearly 36.8 trillion dinars ($33.2 billion) since 2014.
"Iraq actually needs about $90 billion to compensate for the ongoing war on terrorism since 2004," Abdel Zahra Hindawi told Zawya.
"The ministry had called for an international conference for donors to take part in the reconstruction process of regions affected by military operations," he added, without giving further details.
A planning ministry spokesperson said the government has set up a reconstruction fund, which already has $500 million, and that the donors' conference would be held to secure further support in the form of concessionary loans.
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© Zawya 2016
