The IMF's Return to Iraq
Abstract
December 23, 2005, represented a landmark for Iraq. On that day, the Executive Board of the International Monetary Fund (IMF) approved that institution's first ever stand-by arrangement (SBA) for Iraq. The new arrangement is designed to support that nation's economic program over the subsequent 15 months. The amount involved is 475.4 million Special Drawing Rights (SDR) (about U.S. $685 million). The SBA is expected to anchor macroeconomic policy during this 15-month interval. The stand-by arrangement represents Iraq's second postwar loan from the IMF. The first was undertaken under the IMF's Emergency Post Conflict Assistance facility and was granted in September 2004 to assist Iraq's initial postwar recovery by supporting its economic programs through 2005. Just as importantly, the arrangement also was intended to facilitate Iraq's debt relief negotiations with its Paris Club creditors (mainly the advanced industrial countries). Approval of the SBA was a condition for a second stage of debt reduction agreed upon by the Paris Club. From these developments it is clear that Iraq is looking to the Fund to play an integral role in assisting its postwar recovery and eventual return to solvency and self-reliance. Yet few international organizations are as controversial as the IMF. To some, the IMF offers struggling countries the best means of reducing oppressive debt burdens while at the same time obtaining sufficient funds to sustain programs essential for sustained economic growth and development. For others, the IMF, through its critical role in international debt reduction, represents neocolonialism at its worst. As a recent observer of the Iraqi case notes: "Post-Saddam Iraq offers a perfect illustration of how the industrialized world has used debt as a tool to force developing nations to surrender sovereignty over their economies." Are these valid concerns? This article attempts to shed a little light on the issue by examining the Fund's initial efforts in Iraq.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 2006
- Accession Number
- ADA521899
Entities
People
- Robert E. Looney
Organizations
- Naval Postgraduate School