Iraq’s non-oil GDP expected to grow by 5% in 2023: IMF
The International Monetary Fund logo is seen during an IMF/World Bank spring meetings in Washington, U.S. Photo: Reuters
Baghdad (IraqiNews.com) – The International Monetary Fund (IMF) said on Tuesday that with a significant fiscal expansion in place, it is anticipated that non-oil GDP will increase by 5 percent in 2023.
The IMF mentioned in a statement that robust non-oil growth should be sustained with continued budget implementation in 2024. However, in 2023 and 2024, global GDP growth will be less due to decreasing oil output because of the shutdown of the Iraq-Turkey pipeline and OPEC+ production reductions.
The IMF released its statement on the Iraqi economy following meetings with Iraqi officials in the Jordanian capital, Amman, between December 12 and December 17.
With the Central Bank of Iraq’s (CBI) stricter monetary policy, passthrough from the exchange rate revaluation, lower international food prices, and normalization of trade finance as compliance with the new anti-money laundering/combating the financing of terrorism (AML/CFT) framework improved, inflation has decreased from its peak in January and is expected to stabilize in the upcoming months.
The three-year budget that was passed in June 2023 signaled a change in Iraq’s budgeting procedures, with the goal of enhancing fiscal planning and extending significant development initiatives into the medium run.
It is expected that the fiscal balance will change from a sizable surplus in 2022 to a deficit in 2023, considering a delayed start to budget implementation.
According to IMF staff projections, the deficit will continue to grow in 2024 because of the current measures’ year-round effects.
Significant fiscal growth results in long-term spending that will strain the government’s finances over the medium run. This includes a significant rise in public hiring and pensions.