Iraq's economic hopes got a major lift on Friday with the IMF clearing a US$685 million standby loan to help the shattered country get back on its feet.
The US government enthusiastically welcomed the IMF arrangement, as well as an US$11-billion debt-exchange agreement between Baghdad and commercial creditors who were owed money by the ousted regime of former president Saddam Hussein.
Both developments should help Iraq win billions more in credit from both sovereign and commercial lenders as it tries to establish a functioning democracy in the face of a bloody insurgency.
"The Iraqi authorities were successful in promoting macroeconomic stability in 2005, despite the extremely difficult security environment," IMF deputy managing director Takatoshi Kato said in a statement.
The IMF last year awarded a "post-conflict program" worth US$436 million to help Iraq negotiate a morass of claims by government and private creditors who were owed money by the Saddam government.
That programme was due to expire at the end of this year, and Iraq's authorities have been in negotiations for months to obtain a formal standby loan to have access to millions more in IMF funds if needed.
But in return, the IMF had called on Iraq to reduce its generous oil subsidies, improve its economic data and shed more light on the resources given to its central bank.
"The medium-term outlook for Iraq is favorable, but subject to many risks," Kato said.
"A strengthening of the security situation will help the authorities to implement the [economic] programme," he said.
"Moreover, Iraq remains vulnerable to shocks, particularly those relating to oil production development and oil export price movements," he said.
US Treasury Secretary John Snow welcomed the financial boost given to Baghdad.
"This [IMF] arrangement will underpin economic stability and help lay the foundation for an open and prosperous economy in Iraq," he said.
The debt agreement, Snow said, was "a historic, unprecedented accomplishment" which, when fully implemented, would reduce the burden of Saddam-era debt by more than US$11 billion.
"We have been working with Iraq to accomplish this and I couldn't be more pleased that it will be completed," Snow added, calling the package "another major milestone" for Iraq's government on the road to stability.
Iraq's finance ministry said that under the agreement, commercial creditors can swap their Saddam-era loans for US dollar-denominated notes or for interest in a multi-currency loan.
The IMF deal clears the path for the next phase of talks between Iraq and the Paris Club of creditor nations, which agreed last year to cancel US$32 billion of the US$40 billion they were owed by the Saddam regime.
Iraq's IMF ambitions had been strongly backed by the US, which is trying hard to promote a measure of economic stability as it seeks to draw down its increasingly unpopular troop presence in the country.
The IMF said Iraq's economic growth this year was estimated at 2.6 percent, following a rebound of almost 50 percent last year.
Inflationary pressures have moderated this year thanks to record-high oil prices, though prices remain volatile, it said.
CONFRONTATION: The water cannon attack was the second this month on the Philippine supply boat ‘Unaizah May 4,’ after an incident on March 5 The China Coast Guard yesterday morning blocked a Philippine supply vessel and damaged it with water cannons near a reef off the Southeast Asian country, the Philippines said. The Philippine military released video of what it said was a nearly hour-long attack off the Second Thomas Shoal (Renai Shoal, 仁愛暗沙) in the contested South China Sea, where Chinese ships have unleashed water cannons and collided with Philippine vessels in similar standoffs in the past few months. The China Coast Guard and other vessels “once again harassed, blocked, deployed water cannons, and executed dangerous maneuvers” against a routine rotation and resupply mission to
GLOBAL COMBAT AIR PROGRAM: The potential purchasers would be limited to the 15 nations with which Tokyo has signed defense partnership and equipment transfer deals Japan’s Cabinet yesterday approved a plan to sell future next-generation fighter jets that it is developing with the UK and Italy to other nations, in the latest move away from the country’s post-World War II pacifist principles. The contentious decision to allow international arms sales is expected to help secure Japan’s role in the joint fighter jet project, and is part of a move to build up the Japanese arms industry and bolster its role in global security. The Cabinet also endorsed a revision to Japan’s arms equipment and technology transfer guidelines to allow coproduced lethal weapons to be sold to nations
Thousands of devotees, some in a state of trance, gathered at a Buddhist temple on the outskirts of Bangkok renowned for sacred tattoos known as Sak Yant, paying their respects to a revered monk who mastered the practice and seeking purification. The gathering at Wat Bang Phra Buddhist temple is part of a Thai Wai Khru ritual in which devotees pay homage to Luang Phor Pern, the temple’s formal abbot, who died in 2002. He had a reputation for refining and popularizing the temple’s Sak Yant tattoo style. The idea that tattoos confer magical powers has existed in many parts of Asia
ON ALERT: A Russian cruise missile crossed into Polish airspace for about 40 seconds, the Polish military said, adding that it is constantly monitoring the war to protect its airspace Ukraine’s capital, Kyiv, and the western region of Lviv early yesterday came under a “massive” Russian air attack, officials said, while a Russian cruise missile breached Polish airspace, the Polish military said. Russia and Ukraine have been engaged in a series of deadly aerial attacks, with yesterday’s strikes coming a day after the Russian military said it had seized the Ukrainian village of Ivanivske, west of Bakhmut. A militant attack on a Moscow concert hall on Friday that killed at least 133 people also became a new flash point between the two archrivals. “Explosions in the capital. Air defense is working. Do not