The Islamic Development Bank has given its initial agreement to provide $3 billion in easy loans and grants to cash-strapped Iraq after a similar measure was announced by the International Monetary Fund this month.
The Islamic bank’s loan is aimed at helping Iraq cope with a sharp decline in oil revenue, a central bank spokesman in Baghdad said Thursday in an email.
The spokesman did not give further details.
Iraq earlier this month agreed a $5.4 billion standby loan with the IMF.
Finance Minister Hoshyar Zebari announced the agreement on May 19, saying the IMF loans could unlock $15 billion more in international assistance over the next three years.
Iraq’s oil-reliant economy has been hit by plummeting oil prices since mid-2014 and the country is expected to have a financing gap of $17 billion this year unless it can secure more funding, an IMF document obtained by Reuters showed.
Large-scale land grabs by ISIS since 2014 exacerbated economic decline, forcing the Iraqi government to divert large sums to fighting the militants.
In 2016, Iraq has a budget of close to $90 billion, with a deficit of about $20.5 billion. The government hopes to narrow the spending gap with loans from local and international lenders.
Last year, Iraq secured $1.7 billion in loans from the World Bank and $833 million from the IMF.
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