BAGHDAD,— Iraq has reached out to the International Monetary Fund for financial help following the ongoing conflict in the Middle East, a source close to the IMF and an Iraqi government official said Thursday, Reuters reported.
Initial talks took place during IMF and World Bank spring meetings in Washington last month, the source close to the IMF said.
Discussions are continuing on how much money Iraq would need and how any potential loan would be structured, the source added.
An Iraqi official working on financial policy told reporters that Baghdad is in early talks with the IMF and the World Bank over a loan to cover its budget shortfall.
The official said revenues have dropped sharply after oil exports were halted due to the Iran war and the closure of the Strait of Hormuz. The talks are expected to conclude once a new government is formed, the official said.
The war began Feb. 28 with a large U.S.-Israeli bombing campaign against Iran. The conflict prompted Tehran to close the Strait of Hormuz, sending shockwaves across the Middle East and damaging infrastructure and economies in the region.
Iraq has been among the hardest hit. Oil exports make up nearly all government revenue, and the closure of the Strait of Hormuz, which previously carried about one-fifth of global crude oil, cut off most of those shipments.
IMF spokeswoman Julie Kozack said the fund is working with the World Bank and the International Energy Agency to measure the war’s economic impact on member countries.
She said the IMF is engaged in active talks with members, many of whom are seeking policy guidance.
Kozack noted that IMF Managing Director Kristalina Georgieva had said the fund could see requests from at least 12 countries totaling between $20 billion and $50 billion. She declined to name which countries had sought assistance.
The World Bank said it does not comment on shareholder discussions before board approval.
Iraq holds the world’s fifth-largest petroleum reserves. Its last IMF deal was a $3.8 billion standby arrangement that expired in July 2019, of which $1.49 billion was drawn, IMF records show.
Iraq currently owes the fund $2.39 billion, including about $891 million under a rapid financing instrument, according to the IMF website.
(With files from Reuters)
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