Iraq IMF bailout talks under way, Fund says

The International Monetary Fund said Thursday it is engaging with Iraqi authorities as it prepares a new bailout program for the country.

IMF spokesperson Julie Kozack said in Washington that the Fund planned to work with Iraq to understand its priorities and vulnerabilities before deciding how to support the country with a program.

Iraq's economy has been hit by the US-Israel war on Iran. The war, launched in late February, has disrupted the region, and Tehran's retaliatory action has virtually blocked the Strait of Hormuz, a key energy supply route.

Iraq depends heavily on energy exports, which almost entirely rely on transport through the strait. The IMF this month forecast that Iraq's economy would contract by 16 percent this year.

Kozack cited Iraq's severe financing constraints before the war and its narrow non-oil revenue base as pressures on the country's fiscal balance.

IMF chief Kristalina Georgieva first disclosed earlier this month that Iraq had approached the Fund for a new program. Iraq's last IMF program ended in 2019. IMF data shows Iraq has about $428 million in interest payments due to the Fund by 2030.