At the close of the IMF's annual meetings in Bangkok on Saturday, Kristalina Georgieva said Iraq has requested a program and that "we will support Iraq very firmly," adding, "We will get to Iraq both money and policy support." She did not specify the instrument or amount.
Informal conversations with Iraq about possible IMF and World Bank support began around the April spring meetings.
Iraq is contending with the fallout of the war on Iran, including lost oil revenue as the Strait of Hormuz faces near closure. Bloomberg estimates show Iraq's oil exports dropped after the US-Israel war on Iran began, with Iraqi dollar income slipping alongside the Hormuz disruption.
According to the IMF, Iraq's output is projected to contract by 16% this year before expanding by 19% the following year. Earlier this month, the central bank devalued the currency by 13% against the dollar, citing current economic and financial conditions and a cabinet recommendation.
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According to Georgieva, the fund has achieved "significant progress" toward crafting a new arrangement for Lebanon. She also noted that Gulf Cooperation Council countries have implemented reforms that helped them build revenues to "cushion the impact of the shock that has affected them."
For portfolios, the variables to monitor are how fast an IMF package for Iraq takes shape and whether oil shipments through Hormuz stabilize, which together would influence Iraq's revenues and near term growth path.
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