as a basis for a possible funding program in 2016, the IMF said in a statement.

The head of the IMF mission to Iraq , Christian Gooch said the two sides agreed on a monitoring program to experts of the Fund aims to curb spending and reduce the deficit in the budget of Iraq which is expected to be close to 12 percent of next year's economic activity.

Gooch added that the "step will allow the Iraqi authorities to built a record in order to finance a possible deal with the Fund."

Getting a loan from the International Monetary Fund will help the member country of the Organization of Petroleum Exporting Countries to achieve the financial stability to the conditions while it is still suffering because of falling oil prices and the costs associated with fighting ISIS militants.

A senior official told Reuters that the Monetary Fund said last month that the new loan will be "several times" more from the emergency funding of $ 1.24 billion, as the Fund has agreed to submit it in July.

Financial pressures on Iraq have become so heavy that Baghdad halted a plan to issue $2 billion of international bonds last month because investors were demanding too high a yield.

A big new IMF loan to Iraq would come with policy conditions, such as steps by Baghdad to reduce energy price subsidies and reform state-owned enterprises - steps which could be politically difficult.

Prime Minister Haider al-Abadi is already struggling to sustain support for political reforms he announced in August aimed at reducing corruption and waste.

Josz said the IMF expected Iraq's gross domestic product (GDP) to grow by 1.5 percent this year on higher oil production, and the current account deficit to expand to 7 percent of GDP.

He predicted foreign exchange reserves, which amounted to $59 billion at the end of last month, would decline but remain high enough to cover nine months of imports through the end of the year.