Iraq Is Still Holding Talks With World Bank on Loan
May 15 (Bloomberg) - Iraq hasn't yet agreed on financing from the World Bank to help cover a budget shortfall caused by a drop in oil revenue, the governor of the Iraq central bank said.
"Discussions are continuing," Sinan al-Shabibi said in an interview in Manama today. Iraq was hopeful it could raise money itself by selling bonds, he said. "The government would like to depend on its own resources and is waiting for developments in oil prices."
The International Monetary Fund in February approved a two-year, $ 3.6 billion loan for Iraq, and said that the World Bank and other lenders should make up the rest of the Persian Gulf nation's estimated $ 5 billion funding gap through 2010 and 2011.
Iraq, which depends on income from oil exports for 85 percent of government revenue, recorded a budget deficit of 20 percent of gross domestic product last year. The deficit is expected to amount to 19 percent of GDP this year and 6 percent in 2011, according to the IMF.
While a rebound in oil prices from their low point in December 2008 of around $ 32 a barrel has improved the outlook for the country's deficit, inconclusive March elections have increased political concerns. Iraqi leaders are still holding talks on forming a governing coalition.
The US, which led a 2003 invasion to topple Iraqi leader Saddam Hussein, is scheduled to pull out all its troops by the end of 2011 and leave Iraq's security in the hands of the country's own forces.
Sovereign-Debt Crisis
An 18-percent plunge in oil prices since May 3 triggered by the European sovereign-debt crisis makes the situation harder for Iraq, said al-Shabibi. "Of course this is a concern, it will be difficult for fiscal policy."
Iraq had a deficit of $ 19 billion in 2009 and its 2010 budget forecast a deficit of $ 15 billion based on an average price of $ 62 a barrel.
Crude oil for June delivery fell $ 2.79 to $ 71.61 a barrel yesterday on the New York Mercantile Exchange, the lowest settlement since Feb. 5. Oil has dropped 18 percent on the Nymex since it reached $ 87.15 a barrel on May 3, a 19-month high.
Iraq holds the world's third-largest oil reserves, with its 115 billion-barrel reserve behind only Saudi Arabia and Iran.
IMF and Iraqi authorities are projecting average production of 2.6 million barrels per day with exports of 2.1 million barrels a day this year. Next year, the projections are for production of 2.9 million barrels a day and exports of 2.25 million a day.
Iraq has said it can increase oil production more than fourfold to 12 million barrels a day after signing contracts with international oil companies last year in a bid to rebuild its war-torn economy.
http://www.businessweek.com/news/201...-update1-.html
May 15 (Bloomberg) - Iraq hasn't yet agreed on financing from the World Bank to help cover a budget shortfall caused by a drop in oil revenue, the governor of the Iraq central bank said.
"Discussions are continuing," Sinan al-Shabibi said in an interview in Manama today. Iraq was hopeful it could raise money itself by selling bonds, he said. "The government would like to depend on its own resources and is waiting for developments in oil prices."
The International Monetary Fund in February approved a two-year, $ 3.6 billion loan for Iraq, and said that the World Bank and other lenders should make up the rest of the Persian Gulf nation's estimated $ 5 billion funding gap through 2010 and 2011.
Iraq, which depends on income from oil exports for 85 percent of government revenue, recorded a budget deficit of 20 percent of gross domestic product last year. The deficit is expected to amount to 19 percent of GDP this year and 6 percent in 2011, according to the IMF.
While a rebound in oil prices from their low point in December 2008 of around $ 32 a barrel has improved the outlook for the country's deficit, inconclusive March elections have increased political concerns. Iraqi leaders are still holding talks on forming a governing coalition.
The US, which led a 2003 invasion to topple Iraqi leader Saddam Hussein, is scheduled to pull out all its troops by the end of 2011 and leave Iraq's security in the hands of the country's own forces.
Sovereign-Debt Crisis
An 18-percent plunge in oil prices since May 3 triggered by the European sovereign-debt crisis makes the situation harder for Iraq, said al-Shabibi. "Of course this is a concern, it will be difficult for fiscal policy."
Iraq had a deficit of $ 19 billion in 2009 and its 2010 budget forecast a deficit of $ 15 billion based on an average price of $ 62 a barrel.
Crude oil for June delivery fell $ 2.79 to $ 71.61 a barrel yesterday on the New York Mercantile Exchange, the lowest settlement since Feb. 5. Oil has dropped 18 percent on the Nymex since it reached $ 87.15 a barrel on May 3, a 19-month high.
Iraq holds the world's third-largest oil reserves, with its 115 billion-barrel reserve behind only Saudi Arabia and Iran.
IMF and Iraqi authorities are projecting average production of 2.6 million barrels per day with exports of 2.1 million barrels a day this year. Next year, the projections are for production of 2.9 million barrels a day and exports of 2.25 million a day.
Iraq has said it can increase oil production more than fourfold to 12 million barrels a day after signing contracts with international oil companies last year in a bid to rebuild its war-torn economy.
http://www.businessweek.com/news/201...-update1-.html