How much will $15 billion IMF loan really cost Iraq? -Al Monitor

With everyone’s focus on ISIS, little attention is paid the other dimensions of Iraqi politics in the Western press. Between the struggle with ISIS, low oil prices and rampant corruption, Iraq is facing a financial crisis. Baghdad has recently signed a 15 billion, 3 year bail out package with the IMF (International Monetary Fund).

“The IMF will help provide the loan to Iraq from several parties: The IMF will provide $830 million; the World Bank, about $5 billion with an interest of 1.5-3%; and the rest will come from other organizations and countries and will be guaranteed by the IMF at an interest rate of 7.5- 8%, provided that Iraq repays the loan and its interest in a very short period of seven years,” Mashhadani said.”

As usual, the deal involves structural adjustment policies (SAPs):

“Among the conditions set by the IMF is that the government decrease subsidizing fuel prices and reformulate the budget terms and fund allocations to reduce government spending, especially in the operating budget.”

Not surprisingly, there is push-back in parliament. Iraq signed a similar deal in 2004 and could not live up to its commitments. The nature of post-Saddam Iraqi politics also makes the deal problematic. There are questions about how the money will be distributed. For instance, will it be split up on a regional basis with the Kurds getting an independent share or will it all go to Baghdad? There are also concerns that the money could simply disappear into a black-hole of corruption. The deal is also being signed at a point where intra-Shi’a politics are breaking down. Shi’a protests against corruption have been organized by Muqtadā al-Ṣadr. While the complaints are legitimate, al-Sadr has been opportunistic in his exploitation of the situation. No doubt, the deal with give him more ammunition to work with.
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