Iraq battle inflation

IRAQ INFLATION BATTLE 'TOP PRIORITY'

Iraq promised to make tackling high inflation one of its priorities and
said it will gradually keep raising domestic prices of fuel products to
curb a thriving black market, according to a letter by Iraq's top
finance officials to the International Monetary Fund (IMF)."Inflation has
risen to an unacceptable level," the letter, signed by Iraq's central
banker Sinan Al Shabibi and Finance Minister Bayan Jabor, told the IMF.

Racing inflation of almost 77 per cent in August, fell back to 52pc
from September to November, and increased again to almost 65pc in
December. It has caused added hardships among a population struggling with
conflict since the US-led invasion in 2003.

Domestic fuel prices have also been driven up with the phasing out of
fuel subsidies under a $715 million IMF economic programme, which was
recently extended by the government to September.

Excluding fuel and transportation, the inflation rate was stable in a
range of 30pc to 35 pc.

"To curb inflation, the CBI (central bank of Iraq) will continue its
tight monetary policy stance and allow the exchange rate to appreciate
gradually, assuming the inflationary situation warrants a continuation of
this policy," the Iraqis said.

The Iraqis said they were committed to facilitate private sector
imports of petroleum products, following a new oil law aimed at bringing
private firms, both Iraqi and foreign, into oil products distribution.

The oil law illustrated that Iraq was getting closer to setting up a
framework for foreign companies to invest in the country's oil
production, crucial for rebuilding the economy.