WASHINGTON, Jan 16: Iraq’s economy is expected to find stability in 2008-2009 despite political and security problems as oil production recovers and the government moves ahead with reforms, the IMF said on Wednesday.

Mohsin Khan, director of the International Monetary Fund’s Middle East and Central Asia department, said that Iraqi gross domestic product (GDP) growth would likely top seven per cent this year and hold between seven and eight per cent in 2009.

Oil production, which accounts for 70 per cent of the war-ravaged country’s GDP activity, is expected to increase “at least” by 200,000 barrels per day (bpd) in 2008, he said in a news teleconference.

The IMF estimates Iraq produced two million bpd in 2006-2007.

Khan said the IMF’s full-year 2007 forecast of 1.3 per cent GDP growth for Iraq was based on non-oil data from the first six months and probably will be revised upward.“There was an improvement in economic activity” in the second half of the year with an improvement in security, he said, citing “anecdotal” evidence.

Oil production picked up in the fourth quarter and retail services are improving, he said.

“We’re expecting a significant jump in growth,” he said.

The IMF approved a 744-million-dollar credit for Iraq on December 19, just a week after the country paid off an earlier 471-million-dollar loan.

That successor stand-by arrangement, designed to support Iraq’s economic programme over the next 15 months through March 2009, is “precautionary” and the Iraqi government does not intend to draw on these resources, he said.

Surging oil prices boosted Iraq’s oil revenues to $27 billion, six billion dollars higher than projected.

Foreign exchange reserves ballooned to $27 billion at the end of 2007 from $20 billion the prior year.—AFP