December 23, 2005: IMF Approves $685 Loan for Iraq

The IMF’s 24-member executive board approves a standby arrangement for a new $685 million loan for Iraq. The IMF previously provided the country with a $436.3 million emergency post-conflict loan in September 2004 (see September 29, 2004). The approval means that creditor nations will forgive an additional 30 percent of Iraq’s debt, all of which was incurred under the rule of Saddam Hussein. If Iraq fulfills the requirements in the standby arrangement, another 20 percent of its debt will be forgiven (see November 22, 2004). [Associated Press, 12/23/2005; Agence France-Presse, 12/23/2005] One of the reforms required by the stand-by arrangement is that Iraq work with the IMF on the drafting of an oil law to be implemented by the end of 2006. [Bretton Woods Project, 1/23/2006] The agreement states that Iraq needs to “draft a new petroleum law in line with the new constitution and international best practices, thereby defining the fiscal regime for oil and establishing the contractual framework for private investment in the sector.” It adds that IMF staff have underscored “the need to press ahead with structural fiscal reforms,” which include “the move forward toward the commercialization of oil-related state enterprises, and the drafting of a new petroleum law.” [International Monetary Fund, 12/7/2005, pp. 18 ]