Iraq's Odious Debts

IMF completes review of Iraq’s debt

Martin Crutsinger
Seattle Post-Intelligencer
May 27, 2004

Washington: The International Monetary Fund loans to support rebuilding in Iraq will likely come in the second half of this year, an official said Thursday, now that a report on its debt has been completed.

Thomas Dawson, an IMF spokesman, said the institution made no specific recommendation on how much in Iraq’s debt should be forgiven in order to put the Iraqi economy on a sustainable basis going forward.

He said instead that the IMF looked at the types of debt payments Iraq would be able to make under various economic scenarios.

The United States is looking to both the 184-nation IMF and its sister lending agency, the World Bank, to provide loans covering a significant portion of the cost of rebuilding Iraq’s wartorn economy.

Dawson said the agency was still on a timetable that would allow it to start providing loans to the country in the second half, once a “broadly recognized government” was running the country. The United States will hand over political control to the Iraqis on June 30.

The IMF’s report on Iraq debt was prepared for the Paris Club, which includes the United States and 18 other wealthy nations which coordinate issues of debt relief.

That group has estimated that Iraq owes its member countries $42 billion with the largest portions of that debt held by Russia, Japan, France and Germany. Estimates put Iraq’s total foreign debt at around $120 billion.

Dawson said the IMF was not making the Iraq debt report public because it contains confidential information supplied by creditor nations.

Earlier this week, German Chancellor Gerhard Schroeder told reporters that his country’s offer of a substantial amount of debt forgiveness was conditional on an interim Iraqi government being given full sovereignty over the country on June 30.

Last year, President Bush appointed former Secretary of State James A. Baker III as his special envoy on Iraqi debt. Baker has been able to obtain pledges of debt relief from a number of countries including Germany, France and Russia, which staunchly opposed the U.S.-led war.

The IMF pulled its team out of Iraq after the terrorist bombing of the U.N. headquarters building in Baghdad last summer but has continued to provide technical assistance to Iraqi officials in the area of finance from outside the country.

Dawson said the IMF had provided assistance in developing the country’s new laws governing the operations of its central bank and commercial banks.

“We have continued to meet and work closely with Iraqi officials and meet with them regularly outside of Iraq to discuss policy and other matters,” he said.

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