Iraq wins crucial IMF accord

Iraq yesterday won a crucial loan accord with the International Monetary Fund and a $14 billion debt swap with private lenders, taking key steps towards a wider debt deal and access to world financial markets.

The $685 million IMF standby credit arrangement was the fund's first ever with Iraq and is designed to support the nation's economic programme over the next 15 months.

"The Iraqi authorities were successful in promoting macroeconomic stability in 2005, despite the extremely difficult security environment," said IMF Deputy Managing Director Takatoshi Kato.

An insurgency in parts of the country and almost daily suicide bombings in and around Baghdad, the capital, has hindered economic rebuilding since the US invasion in 2003.

But Washington says progress is being made and the IMF agreement is crucial for Iraq's ability to borrow money overseas and necessary to trigger a full debt reduction deal approved by the Paris Club of creditors a year ago.

"I applaud the IMF Board's approval of a standby credit arrangement with Iraq today," US Treasury Secretary John Snow said in a statement. "This arrangement will underpin economic stability and help lay the foundation for an open and prosperous economy in Iraq."