WASHINGTON—The International Monetary Fund Friday approved a $471 million disbursement for Iraq after a second review of the country's loan agreement with the fund.
The funding brings total cash transfers approved for Iraq to about $1.7 billion.
Iraq's rehabilitation needs "remain large and the higher investment spending is essential to help create a vibrant private sector that provides employment opportunities for Iran's large labor force, thus helping to reduce poverty," said Naoyuki Shinohara, the IMF's second deputy managing director. At the same time, he said, the government needs to ensure a high quality of spending. <-- Does this statement not spell RV?
The IMF distributed the funds after giving the war-torn country a waiver from specific economic reporting requirements needed for these loans. IMF said fiscal deficit and spending data weren't yet available.
The conditional funding request made by Baghdad is for about $3.8 billion and is designed to ensure general economic stability and to advance needed structural and institutional reforms.
The IMF also highlighted the need for Iraq to build a better system of financial management, particularly given the expected growth in petroleum revenue for the oil- and gas-rich nation.
"Establishing a framework for oil revenues to succeed the Development Fund for Iraq should help ensure continued accountability and transparency," Mr. Shinohara said. The government should ultimately aim to develop a single treasury account, he added.
Oil and natural-gas resources have proven both a tremendous opportunity and source of conflict for Iraq, as the country is estimated to have some of the largest crude-oil reserves in the world.
One of the biggest political obstacles for the country has been deciding how to divide and distribute the vast petroleum wealth among the regions, particularly since the Kurdish, Shiite and Sunni factions have each argued for a greater representation.
Last year, the IMF said Iraq's financing needs through the end of 2011 would total about $5 billion, depending on the price of oil, to help fund a major budget deficit. But as oil prices have turned out higher than originally expected, it has cut Iraq's financing needs, and will likely push up growth expectations.
In the IMF's latest outlook, Iraq's economy is expected to grow 11.5%, compared to 2.6% last year. Its budget deficit is seen falling to 8.6% this year from about 14% in 2010, but unemployment is still widespread, the fund said.
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