March 28, 2007

Iraqi President Jalal Talabani,

March 23, 2007

Following the 6 month extension of the IMF's Standby Agreement with Iraq, it has published the formal documents presented by the Iraqi Minister of Finance and Central Bank Governor outlining their progress and intentions as regards economic policy. The documents, dated February 23, 2007, include this statement on debt: "Negotiations with China are underway, and contacts have been made with key creditor countries from the Gulf region. A number of non-Paris Club bilateral creditors have indicated a desire to securitize their claims. We will facilitate the development of a Special Purpose Vehicle (SPV), in order to encourage the conclusion of bilateral agreements with non-Paris Club creditors, according to the terms and conditions of the Paris Club agreement, and to avoid the emergence of a multiplicity of different securitizations. In this regard, we will keep the Paris Club fully informed. Most of the remaining unresolved private claims (which are only 4 percent of the original claims) are in the process of reconciliation with claims that are being settled as part of the liquidation of the London branch of Rafidain bank."

March 22, 2007

Iraq and Syria will cooperate in developing Iraq's natural gas reserves as long as a settlement is reached concerning Iraqi debt to Syria incurred during the Saddam Hussein era, Syrian Gas Co. Director-General Ali Abbas said. A 311-mile pipeline is being proposed to link the two countries. Iraq's raw natural gas would be processed in Deir al-Zour, on the Iraqi-Syrian border, and then exported to foreign markets. Discussions also are under way to reopen the Iraqi-Syrian oil pipeline.

March 16, 2007

The Oil Ministry decided to increase the prices of oil derivatives as of Friday, but less than the prices prescribed by the IMF as a condition for debt relief: "Prices of oil derivatives as of today will be as following: 400 Iraqi dinars per liter of fuel (around 29 cents) instead of 350 Iraqi dinars and 350 Iraqi dinars per liter of gas oil (25 cents) instead of 300 Iraqi dinars," Ministry spokesman Aasem Jihad told the independent news agency Voices of Iraq. "Prices per liter of kerosene increased to 100 Iraqi dinars (8 cents) instead of the old price 75 Iraqi dinars, while the official price of the cocking gas cylinder became 3,000 Iraqi dinars (2.26 USD) instead of 1,500 Iraqi dinars." The spokesman added that the increase "came after the last meeting between the Iraqi delegation led by Oil Minister Hussein al-Shahrestani and the World Bank on reducing Iraq's debts," Aasem Jihad stated. The World Bank "proposed equalizing prices of oil derivatives to international levels (750-800 Iraqi dinars per liter of fuel) in return for slashing debts by 80 percent," he highlighted. "The Iraqi delegation, however, insisted that the country's economy and the citizens can not stand such an increase and managed to convince the World Bank (officials) to have no more than 15 percent increase in prices." (the conditions for Paris Club debt relief are formally set by the IMF, but the World Bank works closely with it and and met with Shahristani along with the IMF).

March 14, 2007

The IMF executive board has approved the 3rd and 4th reviews of its Stand-By Arrangement with Iraq; it is unclear why there was a delay in this approval. The Chair of the IMF board praised "the maintenance of fiscal discipline." particularly mentioning: "The increase of official domestic fuel prices." He also said "The government's approval of a new oil and gas law augurs well for the future of the oil sector." As regards debt he said: "Progress in settling arrears with private creditors is commendable. However, further progress is needed towards resolving non-Paris Club official claims."

Washington-based watchdog, the Bank Information Center has published an article about the role of the World Bank in Iraq. Currently "The ISN provides a framework for up to $500 million in IDA resources. Another $500 million in IBRD resources may also be available, contingent upon improvements in creditworthiness. The Bank’s website lists three active IDA projects with commitments totaling almost $300 million. The IFC, the Bank’s private-sector arm, is supporting four private investments in the country totaling $297 million."

March 09, 2007

The conference in Baghdad tomorrow, bringing together Iraq's neighbours, the US and other countries in preparation for a higher level meeting of foreign ministers in Cairo in April, will consider debt. Labid Abbawi, a Kurdish deputy minister in the Iraqi Foreign Ministry, said: "The goal of this meeting is to seek security, political and economic support from the neighboring countries along with discussing the issues of Iraqi refugees and cut of Iraqi debts."