WASHINGTON, March 13: The International Monetary Fund on Tuesday extended a multimillion dollar credit deal for Iraq, and said economic progress was being made despite raging violence in the US-occupied country.

The IMF board approved a six-month extension of the standby arrangement, which was first agreed with Iraqi authorities in December 2005 and now stands at about $715 million.

However, the IMF stressed that Iraqi government was treating the fund as “precautionary” and was not planning to tap into the money.

IMF deputy managing director Takatoshi Kato said Iraq was entering a “crucial period” in its economic recovery.

“Despite very difficult political and security circumstances, the Iraqi authorities have taken important measures to keep their economic programme on track,” he said, citing fiscal discipline and tighter monetary policy.

“Inflation, however, remains high,” Kato stressed, calling for government spending to be kept in check.

“Corruption and violence need to be brought under control to unlock Iraq’s oil wealth. More forceful actions are needed, especially in the area of smuggling,” he added.

The IMF welcomed progress made by the Iraqi authorities in settling arrears owed to private creditors from debts run up by the ousted regime of Saddam Hussein.

“However, further progress is needed towards resolving non-Paris Club official claims,” Kato said.—AFP