IMF Expects Iraq’s Economy to Grow by 1.4% in 2024, 5.3% in 2025

The International Monetary Fund (IMF) said on Thursday that Iraq’s economy contracted by 2.2% in 2022, projecting a growth by 1.4% in 2024 and 5.3% in 2025. (AFP)
The International Monetary Fund (IMF) said on Thursday that Iraq’s economy contracted by 2.2% in 2022, projecting a growth by 1.4% in 2024 and 5.3% in 2025. (AFP)
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IMF Expects Iraq’s Economy to Grow by 1.4% in 2024, 5.3% in 2025

The International Monetary Fund (IMF) said on Thursday that Iraq’s economy contracted by 2.2% in 2022, projecting a growth by 1.4% in 2024 and 5.3% in 2025. (AFP)
The International Monetary Fund (IMF) said on Thursday that Iraq’s economy contracted by 2.2% in 2022, projecting a growth by 1.4% in 2024 and 5.3% in 2025. (AFP)

The International Monetary Fund (IMF) said on Thursday that Iraq’s economy contracted by 2.2% in 2022, projecting a growth by 1.4% in 2024 and 5.3% in 2025.

The international monetary organization expected fiscal deficit to widen to 7.6% of GDP in 2024 from 1.3% in 2023, noting that Iraq requires an ambitious fiscal adjustment to stabilize debt in the medium term and rebuild buffers.

The findings came in the context of the 2024 Article IV consultation with Iraq. The IMF released documents showing that domestic stability in the country has improved since the new government took office in October 2022, facilitating the passage of Iraq’s first three-year budget, which entailed a large fiscal expansion starting in 2023.

This supported the strong recovery in Iraq’s non-oil economy after a contraction in 2022, while the country was largely unaffected by the ongoing conflict in the region.

“Domestic inflation declined to 4% by end-2023, reflecting lower international food prices, the currency revaluation as of February 2023, and the normalization in trade finance. However, imbalances have worsened due to the large fiscal expansion and lower oil prices,” the IMF said in a statement.

Moreover, it said the ongoing fiscal expansion is expected to boost growth in 2024, at the expense of a further deterioration of fiscal and external accounts and Iraq’s vulnerability to oil price fluctuations.

“Without policy adjustment, the risk of medium-term sovereign debt stress is high and external stability risks could emerge. Key downside risks include much lower oil prices or a spread of the conflict in Gaza and Israel,” the IMF added.

In Iraq, real GDP growth would reach 1.4% in 2024 and accelerate to 5.3% in 2025, the IMF said, also projecting deficit to widen from 1.3% in 2023 to 7.6% of GDP in 2024.

It noted that Iraq’s public debt-to-GDP ratio is expected to reach 48.2% in 2024 and 54.6% in 2025.

IMF directors emphasized that a gradual, yet sizeable fiscal adjustment is needed to stabilize debt in the medium term and rebuild fiscal buffers.

They encouraged the authorities to focus on controlling the public wage bill, phasing out mandatory hiring policies, and mobilizing non-oil revenues, while better targeting social assistance.

The Directors agreed that prompt implementation of customs and revenue administration reforms, a full implementation of the Treasury Single Account, and a strict control and limit of the use of extrabudgetary funds and government guarantees are key to support fiscal consolidation.

Limiting monetary financing and reforming the pension system are also important, they stressed.

They commended the central bank’s efforts to tighten monetary policy and enhance its liquidity management framework. Improving coordination between fiscal and monetary operations would help absorb excess liquidity and bolster monetary policy transmission.

They concurred that accelerating the restructuring of the large state-owned banks is also essential.

They also encouraged further modernizing the private banking sector, including by facilitating the establishment of correspondent banking relationships, reducing regulatory uncertainties, and promoting efficiency and competitiveness of private banks.

Furthermore, they emphasized the need for structural reforms to unlock private sector development. They encouraged leveling the playing field between public and private jobs, boosting female labor force participation, and reforming education and labor laws.

The directors agreed that improving governance and combatting corruption are also key, in addition to bolstering public procurement and business regulations, and addressing electricity sector inefficiencies.

They welcomed the renewed efforts toward the World Trade Organization (WTO) accession and encouraged the authorities to improve the coverage and timeliness of statistics.



GE Vernova Rolls Out First H-Class Gas Turbine in Saudi Arabia

In the presence of Prince Abdulaziz bin Salman, Minister of Energy, GE Vernova Inc. announced the successful rollout of the first H-class gas turbine unit completed at the GE Saudi Advanced Turbines (GESAT) facility in Dammam. Image courtesy: GE Vernova
In the presence of Prince Abdulaziz bin Salman, Minister of Energy, GE Vernova Inc. announced the successful rollout of the first H-class gas turbine unit completed at the GE Saudi Advanced Turbines (GESAT) facility in Dammam. Image courtesy: GE Vernova
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GE Vernova Rolls Out First H-Class Gas Turbine in Saudi Arabia

In the presence of Prince Abdulaziz bin Salman, Minister of Energy, GE Vernova Inc. announced the successful rollout of the first H-class gas turbine unit completed at the GE Saudi Advanced Turbines (GESAT) facility in Dammam. Image courtesy: GE Vernova
In the presence of Prince Abdulaziz bin Salman, Minister of Energy, GE Vernova Inc. announced the successful rollout of the first H-class gas turbine unit completed at the GE Saudi Advanced Turbines (GESAT) facility in Dammam. Image courtesy: GE Vernova

In the presence of Saudi Minister of Energy Prince Abdulaziz bin Salman, GE Vernova Inc. has announced the successful rollout of the first H-class gas turbine unit completed at the GE Saudi Advanced Turbines (GESAT) facility in Dammam in an official ceremony held at GESAT.

GESAT, a joint investment with Dussur, is the first facility in Saudi Arabia and the region to manufacture H-Class gas turbines and components.

The first locally completed H-Class unit is set to power the Jafurah Cogeneration Independent Steam and Power Plant (ISPP), which once operational is anticipated to be the most efficient power plant in Saudi Arabia.

By 2030, the entire Jafurah gas field is expected to produce up to 630,000 barrels of natural gas liquids and condensates, as well as over 420 million standard cubic feet (MMSCFD) of ethane per day.

The successful rollout of the locally completed gas turbine at GESAT is a significant milestone in the Kingdom’s energy sector and contributes to Saudi Arabia’s economic diversification and local skills development initiatives, in alignment with Saudi Vision 2030 goals.

The rollout underscores GE Vernova’s commitment to bringing cutting-edge technology products to support both the Kingdom’s energy needs and its sustainability goals.

President of GE Vernova in Saudi Arabia Hisham Al-Bahkali said: “We are incredibly proud of GESAT’s accomplishments in driving industrial localization within the Kingdom’s energy sector in support of Saudi Vision 2030.”

He added: “GESAT strengthens ‘Made in Saudi’ capabilities and, since 2018, has exported 200+ accessory modules for power plants generating more than 11 GW.”

Renowned for their high efficiency and performance, GE Vernova’s H-class gas turbines offer one of the most cost-effective conversions of natural gas to electricity in their class, and support flexible power generation needs across the Middle East.

“The high efficiency and hydrogen readiness of our H-class turbines can support the country’s energy transition, as the turbines can rapidly ramp up or down to support grid stability as more intermittent renewables are integrated into the energy system,” said Joseph Anis, president and CEO of GE Vernova’s Gas Power business in Europe, Middle East and Africa.

To further support the Kingdom’s economic diversification and export capabilities, GE Vernova also signed an MoU with Saudi EXIM that aims at enabling the export of goods and services of GE Vernova from Saudi Arabia through lending and insurance support from Saudi EXIM Bank.

Since inception, GESAT has been set up to deliver technology products for export from the Kingdom, and this MoU aims to further enable export projects. The signing was done by Eng. Saad Alkhalb, CEO of Saudi Exim Bank, and Hisham Al Bahkali, President of GE Vernova for Saudi Arabia.

GE Vernova spun-off from GE and began trading as an independent company on the New York Stock Exchange (NYSE) on April 2, 2024. With approximately 55,000 wind turbines and 7,000 gas turbines, GE Vernova's technology helps generate about 25% of the world's electricity and has a meaningful role to play in the energy transition.