Iraq’s IMF talks reach 3-year reform plan, but loan size still unknown

BAGHDAD — The size of an International Monetary Fund loan to Iraq, and how the government would spend it, are still unknown even as the talks move on to a three-year reform plan, economist Ziad al-Hashimi said Thursday.

The Finance Ministry said Wednesday that Finance Minister Falih al-Sari and an IMF delegation had finished a round of talks in Amman, Jordan, and made progress toward a reform program for 2027 to 2029. The ministry said expert-level negotiations would continue on a joint document setting out the reforms and a three-year timetable for carrying them out. The statement gave no figure for the financing.

Writing on Facebook, Hashimi said the government is seeking emergency financial support that would come with conditions: a program of fiscal and monetary reforms. “Negotiations on this loan have moved from discussing economic problems in general to setting a medium-term reform framework lasting three years, from 2027 to 2029,” he wrote.

He said the fund’s program would set four priorities. “The IMF’s reform program focuses on four main areas that take priority: fighting corruption, reforming public finances, reforming monetary policy and restructuring the banking sector, and these are areas that really deserve to be the basis of any reform plan,” Hashimi wrote.

The ministry’s own list was longer. It said the talks covered public financial management, a framework for monetary policy, state and private banks, controls on money laundering and terrorism financing, the electricity sector, governance and the fight against corruption.

On the money itself, Hashimi wrote that the Finance Ministry had given no explanation. “The value of the loan and where the government will spend it are still unknown at this moment,” he wrote.

He said the reform plan may matter even more than the size of the loan. “Despite that, there are still doubts about the government’s ability to implement this plan, because it would deprive the political class of its interests, which it can only preserve if the fiscal and monetary imbalance stays as it is, without reform,” Hashimi wrote.

Iraq formally asked the IMF for a program last month. IMF Managing Director Kristalina Georgieva announced the request at the close of the fund’s annual meetings in Bangkok on Oct. 17 and said the IMF would support Iraq “very firmly.” The fund forecasts that Iraq’s economy will shrink 16% this year, after the U.S.-Israeli war with Iran disrupted oil exports through the Strait of Hormuz.

Not every economist welcomes the borrowing. Economist Nabil al-Marsoumi called IMF borrowing a “trap” last month, despite its low interest rate. He said the fund lends to close budget deficits rather than to pay for projects, and asks borrowers to raise revenue and rein in spending so they can repay. In Iraq, he said, that could mean less government support for the poor and could even reach the public salary bill.

The payroll is where an IMF program would bite, because the state employs millions and pays them with oil money. The government spends 7.7 trillion dinars a month on salaries, pensions and welfare payments to about 10 million people, the prime minister’s financial adviser, Mazhar Mohammed Salih, said in August. Oil provides more than 90% of federal revenue. Close to 4 million Iraqis are state employees, 62% of them in the security and military services, the acting planning minister said in May, and the 2027 budget draft would move contract and daily wage workers onto the permanent payroll.

In its last full review of Iraq’s economy, in 2025, the fund said rising spending on wages and energy had worsened the budget. It called for limits on mandatory hiring and an attrition rule, under which not every employee who leaves is replaced. It also urged Iraq to reform public-sector hiring “to boost productivity” and put wages and pensions at 22% of economic output in 2024.

As recently as May, Salih said Iraq had not asked the fund for a loan but would borrow if needed. Iraq’s last IMF program was a $5.34 billion Stand-By Arrangement approved in 2016. About two-thirds of it was paid out before it ended in 2019, and Salih said in 2024 that Iraq had repaid its IMF loans in full.