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Last Updated: Tuesday, 19 October, 2004, 12:32 GMT 13:32 UK
Iraq 'set for 50% growth' in 2004
Iraqi oil pipeline
Iraq has a wealth of oil, but the infrastructure needs improving
Iraq's economy is set to grow more than 50% this year, the International Monetary Fund (IMF) says.

In a review following a $436m (230m) emergency loan, the Fund said the authorities had created "macroeconomic stability" in the country.

But it acknowledged its 52% forecast growth followed a 35% collapse last year amid an "almost complete halt in economic activity".

And it said that continued fighting and Iraq's debts made its lending risky.

"Without the commitment of the international community, the opportunity for reform risks being lost, and Iraq could return to a regime of autocracy, renewed economic decline and rising poverty," the IMF's staff wrote.


Help with Iraq's estimated $124.9bn in foreign debt was key, the Fund said.

Economic growth
2004: 52%
2006-9: average 10% a year
Oil revenues
2004: $16.2bn
2005: $17.1bn
2006: $20.8bn
2007: $20.5bn
2008: $20.3bn
2009: $22bn

The "Paris Club" of creditor nations has met repeatedly to thrash out a debt forgiveness package, but has yet to reach agreement.

The US wants 90% forgiveness, while other countries - including France and Germany - say that is far too much for a nation with Iraq's oil wealth.

International development campaigners point out that the US has never backed such significant levels of debt forgiveness for poorer highly-indebted states such as many in sub-Saharan Africa.


The IMF's report was keen to find upsides to Iraq's current condition.

The interim government - and its predecessor, the occupation authorities - had achieved several key reforms despite the precarious security situation and economic collapse, it said.

Among those it listed were the introduction of a new currency, new banking and tax laws and the resumption of much of Iraq's oil output.

In a letter attached to the report, the interim government said it intended to have a full oil sector reconstruction plan in place by the end of 2005.

Iraqis survey a vehicle destroyed in a bomb attack
Continuing attacks are leaving Iraq's economy in trouble
After falling to 1.2 million barrels a day in 2003, production is set to average 2.1 million in 2004, the IMF said, rising to 3.5 million by 2009.

It forecast oil revenues - making up some 80% of overall output - of $16.2bn in 2004, rising to $22bn by 2009.


But the continued violence remains a serious concern.

"Iraq continues to suffer repeated attacks by insurgents against government officials and police officers, as well as sabotage of crucial infrastructure," the IMF acknowledged.

"This has severely hampered the economic recovery and reconstruction of Iraq."

Recent figures suggested that hardly any of the $18bn set aside by the US for reconstruction had actually been spent.

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