Economy News _ Baghdad
The International Monetary Fund (IMF) urged the Iraqi government on Sunday to reduce subsidies on the electricity sector and protect the poorest and least income groups, while recommending a comprehensive reform of the banking sector.
The IMF Executive Board has concluded Article IV consultations with Iraq, the IMF said in a statement received by the Economy News. .
He added, “Directors in the Council urged to seize the opportunity to improve the security situation and high oil prices to implement policies and structural reforms aimed at ensuring macroeconomic and financial stability and address long-standing social problems.”
“Building a strong fiscal framework is essential to maintain fiscal and macroeconomic stability and enhance safety margins,” the IMF said, adding that it supported “a gradual increase in spending on reconstruction and development in parallel with improved absorptive capacity.”
The Fund stressed the need for gradual fiscal control, including the containment of current primary spending and increase non-oil revenues to maintain financial sustainability and keep debt within tolerable limits, recommending that containment of increasing the wage bill and reducing subsidies for the electricity sector are priorities in the spending procedures. Protection of the poorest and lowest income groups from being affected by financial controls. ”
The IMF called for “a comprehensive reform of the banking sector in order to maintain financial stability, urging the authorities to restructure large state-owned banks, strengthen supervision and implement other reforms to increase financial intermediation activities.”