By Palash R. Ghosh | October 4, 2010 11:03 AM EDT
The () has approved of a $741-million loan to and praised the war-torn country for making "good progress" in reconstructing its economy.
The money is the second tranche of an overall $3.7-billion loan facility designed to aid in rebuild its damaged infrastructure, which supports its all-important oil industry.
Thus far Iraq has received about $1.2-billion from the under the loan agreement.
The IMF particularly commended Iraq for keeping macroeconomic stability amidst very difficult security conditions.
"Iraq has continued to make good progress in rebuilding key economic institutions and maintaining macroeconomic stability, under very difficult circumstances," the IMF stated. “[The] success in reconstructing the economy will depend on accelerating the pace of implementation of the government’s fiscal and financial sector structural reform agendas. The modernization of Iraq’s public financial management system encompasses further improvements in fiscal reporting and the budgetary process, and the adoption of a single treasury account.”
Regarding the state of Iraq's economy, the IMF said that in the first half of 2010, oil revenues remained strong, inflation continued to be subdued, and the budget recorded a surplus.
“For 2010 as a whole and 2011, based on conservative assumptions for oil prices and export volumes, Iraq’s external and fiscal positions are expected to remain in deficit but return to a surplus in 2012,” IMF noted.
Separately, Iraq's oil minister Hussein al-Shahristani said the country increased the level of the oil reserves it claims to own by 24 percent in its first revision since Saddam Hussein fell from power.
He said Iraq has 143.1-billion barrels of known and extractable oil reserves, up from prior 115-billion barrels estimate. Should this be correct, that would be the size of Iraq's oil reserves exceed that of Iran.
"This is fairly significant," said David Hunter, an analyst at M&C Energy Group. "You have to bear in mind that 80% of the Iraqi economy is based on oil."
However, Iraq's current oil production is only about 2-million barrels per day, below its current quota.