The International Monetary Fund (IMF), has agreed with Baghdad to help the Iraqi Government to deal with budget strains due to the sharp drop in oil revenues.
The IMF also promised to help millions of people displaced by the fight against Islamic State (IS), militants.
Iraq will be able to borrow up to 5.4 billion dollars under the 36-month agreement with IMF staff in the region.
The standby arrangement must still be approved by the IMF’s executive board as early as June or July, after Iraqi authorities implement reforms required under the deal.
“Iraq has been hit hard by the conflict with (Islamic State militants) and the precipitous fall in oil price’’, IMF mission chief for Iraq, Christian Josz said.
Islamic State forces seized large swathes of Iraqi territory in 2014.
“Despite military assistance from a US-led international coalition, the battle to dislodge the movement from Iraq’s Sunni Muslim regions continues to strain the country’s resources.
“More than four million people have been internally displaced by the conflict.
“The Iraqi government’s budget is heavily dependent on petroleum revenue, and the steep fall in oil prices has left the country short of hard currency.
“To address the urgent balance of payments need, the Iraqi authorities and IMF staff have agreed on a three-year programme of economic and financial policies.
“The policies will bring spending in line with the lower level of oil prices and ensure debt sustainability”, Josz said.
Measures in the programme are intended to protect the poor, improve government financial management and transparency, and shore up the financial sector stability. (dpa/NAN)