The International Monetary Fund approved a $436 million loan to Iraq on Wednesday, a milestone in the nation's effort to normalize its finances and rebuild its economy.
The move, though not a surprise, was welcome news for the Bush administration, which had been prodding the IMF to reach an agreement with Iraq's interim government on an economic program. U.S. officials expect that the program will pave the way for billions of dollars in aid from the World Bank and meet one of the conditions for creditors to forgive much of the nation's debt, which totals about $120 billion.
The action by the IMF's 24-member board "shows, as we have always said, that when Iraq would establish a recognized government, it would have the assistance of the fund," Rodrigo de Rato, the IMF managing director, said at a briefing for reporters in Washington.
Still, the IMF loan is a modest measure given the formidable challenges of restoring an economy reeling from years of international sanctions, the U.S.-led invasion and continued violence by insurgents.
"The first step in Iraq is to deal with the security situation," Raghuram Rajan, the IMF's chief economist, said at a news conference. "One would hope that Iraq would rebound very strongly after that."
-- Paul Blustein