Iraq's Odious Debts

K—Ühler sees sunny times ahead for IMF

Rosie Murray-West and Lachlan Johnston
Telegraph, UK
April 14, 2003

Horst K—Ühler, managing director of the International Monetary Fund, said yesterday that events in Iraq and the tone of the IMF meeting in Washington had boosted his hopes for a post-war economic recovery.

“I am much more optimistic now than I had been two or three weeks before,” he said. “Not only because of news that the war will be short, but also because of the confirmation that the spirit of co-operation [within the IMF] is strong and intact. This gives me a lot of confidence,” he said during the fund’s spring meeting.

IMF policymakers pledged unity on the rebuilding of Iraq, saying that the members supported a further UN Security Council resolution. This echoed a similar statement by the G7 finance chiefs, who pledged an international effort to rebuild Iraq’s battered economy at their meeting on Saturday night.

Britain’s Chancellor, Gordon Brown, who chairs the IMF’s International Monetary and Financial Committee, said the entire organisation was united on the need for a UN resolution.

“This was an enormously positive step forward,” he said. Iraq’s debts amount to up to $127 billion (–à80 billion), according to some estimates. Total Iraqi liabilities, including Gulf War claims, may exceed $380 billion.

Mr K—Ühler said it may be too soon to pursue debt forgiveness for Iraq, despite pressure from Washington. “Debt forgiveness for Iraq – for me, this is a bit premature to judge,” he said. First, Mr K—Ühler added, it was important to find out how much debt Iraq has.

The rebuilding of Iraq has also attracted the interest of emerging market investors. Mark Mobius, head of global emerging markets at Franklin Templeton, said that Turkey was currently the best place to invest in the Middle East, but that Iraq also had potential.

“Once they get their act together and put a government in place then I think there will be good opportunities in Iraq,” he said.

“A good government and a market oriented economy would make Iraq a very interesting place to invest.”

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