IMF praises CBI measures to control inflation

Shafaq News/ The International Monetary Fund (IMF) mission praised the Iraqi government's measures, including the monetary policy led by the Central Bank of Iraq in 2024.

The report for the 2024 Article IV Consultation indicated that "the Central Bank of Iraq has taken several measures aimed at stabilizing the national currency and controlling monetary inflation."

"The Central Bank raised the interest rate on monetary policy tools from 4% to 7.5% and increased the banks' mandatory reserve requirements from 15% to 18%. These steps were decisive in reducing the inflationary pressures that Iraq suffered from, and this contributed to creating an environment and a more stable economy." The report mentioned.

Moreover, the report highlighted that "important reforms in the banking sector, such as the gradual increase in bank capital and mergers between small banks, aim to strengthen the banking sector and increase its efficiency and flexibility in the face of economic shocks."

"Iraq has implemented new compliance measures to improve the transparency of cross-border financial transactions by launching an electronic platform that imposes the disclosure of financial beneficiaries, which enhances the integrity of financial transfers in accordance with international banking standards, in addition to the role of the Central Bank of Iraq in expanding Correspondent banking relationships, to facilitate smoother international trade financing operations."

In its previous report on May 16, the team revealed that domestic stability has improved since the formation of the new government in October 2022, enabling the passage of Iraq's first three-year budget, which includes significant fiscal expansion starting in 2023.

The non-oil economy experienced a strong rebound in 2023 after a slowdown in 2022, largely unaffected by the ongoing regional conflict. "Nonetheless, Iraq remains highly vulnerable to oil price fluctuations and private sector activity is hindered by the large state footprint—including as an employer of first resort—corruption, red tape, underdeveloped infrastructure, and poor access to credit."