Iraq seeks IMF loan, Saudi investment

Iraq is in talks with the International Monetary Fund for a loan and is seeking Saudi investments in its natural-gas fields, as Baghdad tries to bolster its battered economy in the face of the coronavirus and low energy prices.

The IMF and Iraq are in “intensive” negotiations about a loan that would probably be a maximum of $5 billion, Ali Allawi, the Opec member’s finance and deputy prime minister, said in an interview in Baghdad. He didn’t specify if Iraq wanted a rapid credit facility, which would come with few strings attached, a conditional line or both.

“There is no formal proposal from the Iraqi government and there is no formal response from the IMF, but we are moving in that direction,” he said.

Saudi Arabia has expressed interest in investing in Iraqi gas, Allawi said. Iraq’s government has proposed that the Saudis put money into the gasfield of Akkas in the west or Mansuriya in the east. They could also invest in capturing gas from the southern oil deposit of Ratawi, according to Allawi.

Sectors

“Saudi Arabia has a high readiness to back our energy projects,” he said. “At the end of the day, they will pick one field. They are also interested in solar energy.”

Allawi, who travelled to Saudi Arabia and Kuwait in late May, ruled out getting budgetary support from either country. Iraq still owes Kuwait about $2 billion in reparations for invading it during the Gulf War of 1990-91, and has in the past sought debt relief.

The IMF and Saudi talks come as Iraq tries to shore up its finances. The economy will probably contract 7 per cent to 9 per cent in 2020, Allawi said.