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Progress made in Iraq oil oversight - IMF official

Deals

A UN watchdog agency cannot say whether all of Iraq’s oil money was properly used but significant progress has been made to improve transparency, an International Monetary Fund official said on Friday.

Bert Keuppens, one of two International Monetary Fund officials on the United Nation’s International Monitoring and Advisory Board (IAMB), said more than $100 billion has flowed into an Iraq oil fund since it was launched in 2003. “Our objective was to be able to report that all oil revenues were used for the benefit of the Iraqi people,” Keuppens told IMF Survey publication. “Because of many shortcomings in a country that is torn apart by war, the IAMB has not been able to unilaterally declare that all oil revenues have been used for the benefit of the Iraqi people. You simply have no control over all oil revenues.” Oil is the country’s main source of hard currency needed to rebuild after years of mayhem prompted by a 2003 US-led invasion. Proceeds from oil sales pass through the Development Fund for Iraq.

In 2007, oil output was around 2 million barrels, of which three-fourths were exported, amounting to between $25 billion and $30 billion a year in sales, Keuppens said. The bulk of the money is used for budget support in Iraq and flows through the finance ministry to spending ministries, which are subject to IAMB audits.

 

SHORT ANSWER

Asked whether the IAMB had encountered corruption in its work, Keuppens said: “The short answer is yes. Under the circumstances one would expect that.” However, “significant progress has been made in ensuring, that the oil revenues are used for the benefit of the Iraqi people, which was the original objective of the body,” he said. Keuppens said oil smuggling had been reduced and there were better controls over the oil being pumped out of the ground. The UN Security Council created the IAMB to watch over the stewardship of Iraq’s natural wealth. It includes representatives from the IMF, the United Nations, the Arab Fund for Economic and Social Development and the World Bank.

Chris Hemus, who heads the IMF’s safeguards assessments division, said there were still concerns about the lack of a proper metering system for Iraq’s oil in the field and controls in the spending ministries. He said an Iraqi Committee of Financial Experts (COFE) established in 2006 to follow up on IAMB recommendations for improvements will eventually take over the IAMB’s functions, probably at the end this year. He said the committee had the expertise and “at this point we expect that COFE would be ready to take on this role”. “Against that background, we believe that very good progress has been made in addressing the concerns raised by the IAMB,” Hemus said. “It’s not that challenges don’t remain, but progress is being made, and the more important things are being actively addressed, notably the metering.” (Reuters)

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