Iraq recovery hampered by security concerns

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The International Monetary Fund said on Tuesday that the continuing violence in Iraq is holding up the recovery of that nations economy. The IMF said that the comeback of the oil industry there, which accounts for three-fourths of the Iraqi economy, has only grown enough for the gross domestic product to grow by 3.7 percent in 2005, after a GDP growth rate of 46.5 percent in 2004, although it expects that growth will speed up again in the next two years. One IMF official has said that reconstruction has been more difficult than anticipated, both inside and outside the oil sector, and that security problems are a big part of that difficulty. Contractors and others involved in the reconstruction effort have reported that between 30 percent and 50 percent of their spending must go to security and insurance due to the continuing violence from insurgents. Other problems standing in the way of the reconstruction of the Iraqi economy, especially outside the oil sector, include poor communications and electricity shortages. Suggestions made by the IMF, which gave Iraq an emergency loan of $436 million last year, to help Iraq reconstruction along include debt relief and more aid from the international community. The IMF also urged Baghdad to pursue reforms, including the improvement of fiscal oversight, the curbing of corruption, and the repeal of domestic oil subsidies. A repeal of the subsidies, the IMF said, would free up for other uses revenues equal to as much as 30 percent of Iraqs GDP.