IMF extends 2-year Iraq loan package by 7 months

The International Monetary Fund announced Friday an extension of a two-year loan window to Iraq by seven months to allow the authorities time to get policy measures on track under the program. That means Iraq has extra time to borrow from the $1.96 billion in IMF financing that remains available. The loan, initially for $3.6 billion, had been scheduled to expire on July 23 and will now expire on Feb. 23, 2013, the IMF said in a statement. The IMF executive board approved the extension on July 20 following a request by the Iraqi authorities, the global lender said. The IMF said the extension will provide the Iraqi authorities with more time to implement the policy measures needed to complete the fund’s combined third and fourth reviews under the so-called Stand-By Arrangement program. “The extension will, in particular, provide time for discussions on fiscal policies for the remainder of 2012 and on measures to improve the functioning of the exchange regime,” it said. The IMF approved the SBA for the war-torn country in February 2010 to help authorities ensure macroeconomic stability, advance structural reforms and temporarily support the budget. The IMF has released two installments of the loan to Iraq, in October 2010 and March 2011, following the first and second reviews of the country’s economic performance. The current IMF loan to Iraq follows a loan of $746 million in 2005, which was extended in 2007 and replaced by another SBA that expired in March 2009. In 2004, the IMF had given “post-conflict” aid to oil-rich Iraq after it lost a war against the U.S. and its allies. The Iraqi economy is slowly recovering from the destruction caused by the international isolation of the regime of Saddam Hussein before the war, by the war itself and the violence that followed. From DailyStar