Iraq’s outstanding debt to a key Arab League financial organisation has swelled to more than $530 million (Dh1.9bn) as the conflict-battered country has been unable to repay funds owed to that institution for more than 10 years.
War-torn Somalia is another key debtor to the Abu Dhabi-based Arab Monetary Fund (AMF), while the fund has reached an initial agreement with Sudan involving rescheduling part of the debt and writing off the rest.
AMF figures show Iraq’s arrears to the IMF-style Arab fund have climbed steadily over the past 10 years because of accumulating interest and default on the principal debt the country has been unable to pay back after its economy was crippled by persistent wars.
From about $368m at the end of 2001, Iraq’s debt to the AMF surged to nearly $410m at the end of 2002 and more than $440m in 2003. At the end of 2006, the debt swelled to $530.5m and AMF sources said the debt would have further climbed to more than $550m at the end of 2007.
“Total defaults owed to the AMF reached around 176.6m Arab Accounting Dinars ($754m), including nearly $292m in principal debt,” the AMF said. “Iraq has remained the biggest defaulter in member states.”
The other key defaulter is Somalia, which owed the fund around $227m, including nearly $68m in principal loans and the rest in interest.
Sudan had been among the three main defaulters before it reached a tentative agreement with the AMF four years ago to settle the debt.
“Those arrears do not include the outstanding debt of around 18.4m Arab Accounting Dinars ($84.5m) owed by Sudan to the fund… it has been excluded under a rescheduling agreement, which involves a write-off at a later stage under a decision by the fund’s governing board,” the report said.
The swelling arrears forced the AMF to suspend Iraq’s membership and halt loans nearly 15 years ago although it has maintained its technical assistance to the Arab country. During AMF-Iraq talks in 2004, the fund said it would resume its lending activity and finance post-war reconstruction in the war-shattered country but stressed a solution to the debt must be reached.
The total arrears at the end of 2006 accounted for nearly 28 per cent of the fund’s paid up capital of around $2.68bn, subscribed mainly by the UAE, Saudi Arabia, Algeria, Iraq, Kuwait, Egypt and Libya. The AMF was created by the Arab League in Abu Dhabi in 1975.
Iraq debt to AMF climbs to $530m