Iraq eyes up to $4bn loan from IMF

Iraq restarted talks with the International Monetary Fund (IMF) after previously halting efforts to secure aid, the country’s finance minister Ali Allawi told reporters on Thursday, according to Bloomberg.

Talks between both parties began last year amid the coronavirus (COVID-19) pandemic as demand shock sent oil prices tumbling, but were tabled as crude and the country’s foreign reserves recovered. The government now aims at covering its budget deficit with a $4 billion loan from the IMF.

“I do not think we will reach an agreement with the IMF before the end of this year,” Allawi told reporters in Baghdad.

Iraq is also expected to sign an agreement with TotalEnergies SE, a French multinational integrated oil and gas company, before the current government’s term ends. Though finalizing the contract could extend into the next administration, Allawi said.

OPEC’s second-biggest producer, TotalEnergies SE, was approved on July 25 and decided to develop a natural-gas field in Iraq. The decision will help boost the country’s oil output as it is also a step by the French energy company to capture and process 600 million standard cubic feet a day of gas from the Ratawi field, according to the government.

The finance ministry started the 2022 draft budget with the price of oil at $50 per barrel, though that level is not fixed. The ministry plans to issue 1.5t dinar of government treasuries next month, in cooperation with the central bank.

Current oil price levels are good for producers and balanced for consumers, Allawi said. The next battle in OPEC will not be about prices but over who exports more. If all members boost exports, prices will definitely suffer, he said.