IMF Executive Board Reviews Iraq Misreporting, Remedial Steps

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IMF Executive Board Reviews Iraq Misreporting, Remedial Steps

March 4, 2021




Washington, DC: The Executive Board of the International Monetary Fund (IMF) has reviewed a non-complying purchase by Iraq of SDR 584.2 million following the completion of the second review under the 36-month Stand-By Arrangement (SBA) on August 1, 2017. The SBA was approved on July 6, 2016 for a total amount of SDR 3.831 billion (230 percent of quota) and expired on July 7, 2019.

At the time of the second program review under the SBA, the authorities requested a waiver of applicability for end-June 2017 performance criteria (PCs) on public debt and the non-oil primary balance, information on which was not available. The waiver of applicability was granted on the condition that the information provided on Iraq’s performance under these criteria at end-December 2016 was accurate.

The non-complying disbursement arose as a result of nonobservance of the condition of accuracy for the waivers of applicability of the PCs on public debt and the non-oil primary balance granted by the IMF Executive Board at the time of the second review under the SBA. After the completion of the second review, it was revealed that the end-2016 government-guaranteed debt was under-reported by 1.3 percent of GDP while the non-oil primary fiscal balance was over-reported by 0.1 percent of GDP.

The authorities have closely collaborated with IMF staff to remedy the situation and strengthen their control of government guarantees. Specifically, they undertook a detailed exercise to verify the end-2016 stock of government guarantees certified by a decision of the Council of Ministers. In 2019, the authorities enacted a new Public Financial Management (PFM) law, which requires all government guarantees to be approved by Parliament as part of the annual budget process. Furthermore, Iraq’s Council of Ministers approved a sound regulatory framework for vetting and issuance of government guarantees which, among other things, envisages establishing a database of government guarantees and reconstituting a Guarantee Committee as the primary body responsible for vetting government guarantees. The complexity of these measures and the political events in Iraq explain the time required to bring this case to a conclusion.

In view of the authorities’ corrective measures, the Executive Board granted waivers of nonobservance of the condition of accuracy of the information reported on the end-2016 PCs on public debt and the non-oil primary balance.

The Executive Board also found that the inaccurate reporting on the observance of the end-2016 PCs gave rise to Iraq’s breach of its obligations under Article VIII, Section 5, of the IMF’s Articles of Agreement, which requires member countries to furnish such information as the Fund deems necessary for its activities, including information that is necessary to assess observance of PCs. In view of the corrective measures implemented by Iraq, the Executive Board decided not to require any further remedial action in connection with the breach of obligations under Article VIII, Section 5.

IMF Communications Department
MEDIA RELATIONS
PRESS OFFICER: WAFA AMR
PHONE: +1 202 623-7100EMAIL: MEDIA@IMF.ORG
@IMFSpokesperson


https://www.imf.org/en/News/Articles/2021/03/04/pr2160-iraq-imf-executive-board-reviews-iraq-misreporting-remedial-steps

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Article VIII. General obligations of Member States


Section 5. Disclosure of Information


 (a) The Fund may request the Member States to provide such information as it deems necessary for the conduct of its operations, including national data on the following, which are considered a minimum necessary for the fulfillment of his mission:


 (i) official, internal and external assets: 


(1) gold; 


2) in foreign currency; 


(ii) internal and external assets of banking and fi nancial institutions other than official bodies: 


(1) gold;


 2) in foreign currency;


 (iii) gold production; 


(iv) gold exports and imports, by country of destination and country of origin;


 (v) total exports and imports of goods, valued in national currency, by country of destination and country of origin; 


(vi) international balance of payments, including 1) trade in goods and services, 2) gold trading, 3) known capital transactions and 4) all other items;


 (vii) the situation of international investment, ie investments from abroad in the territories of the Member State and investments abroad by residents of the Member State, to the extent that it is possible to provide this information; 


viii) national income; 


(ix) price indices, that is, commodity prices, both wholesale and retail, and import and export prices; 


(x) foreign exchange buying and selling price; (xi) exchange regulations, ie the full set of rules in force at the time of the Member State's admission to the Fund and the detailed indication of subsequent changes as they occur; 


Art. VIII, section 5 VIII. Member States' general obligations 27 (xii) where there are formal clearing agreements, details of the amounts being cleared in settlement of commercial and fi nancial transactions and the time during which arrears have remained unpaid.


 (b) When requesting such information, the Fund shall take into consideration the extent to which the Member State may provide the requested data. Member States are not required to provide details to divulge the affairs of individuals or companies. However, Member States undertake to provide the information requested in as much detail and as accurately as possible and to avoid, as far as possible, providing simple estimates.


 (c) The Fund may make arrangements to obtain, in agreement with the Member States, additional information. It serves as a center for the collection and exchange of information on monetary and fi nancial problems, thus facilitating studies to assist Member States in developing policies to promote the achievement of the Fund's goals.





https://www.dinardaily.net/t87916-article-viii