Iraq Economy to Surge on a Wave of Oil

Rising oil production in Iraq will help its economy outperform its neighbours this year.

In an optimistic report, the International Monetary Fund predicted that the economy would grow by 6% in 2014, despite the ongoing security challenges in the country.

The IMF team met an Iraqi delegation in the Jordanian capital of Amman where they predicted that oil production would hit 3.2 million barrels per day (mbpd) this year, while oil exports could peak at 2.6mbpd.

Carlo Sdralevich, the IMF's mission chief for Iraq stressed that Iraq's draft 2014 budget has pencilled in big spending projects on security, social assistance, and transfers to the provinces.

"To preserve macroeconomic stability, planned expenditure commitments should be scaled down, while preserving key social spending. In the longer run, Iraq should strive to manage well its large, and rising, oil revenues by containing current spending and building up fiscal and external buffers," he added.

Meanwhile, Iraq's central bank continues its drive to reform the financial sector, with a new central bank, commercial bank and payment system in the pipeline.