x Abu Dhabi, UAEFriday 28 July 2017

Promising signs out of Iraq for global investors

What's Up: With the Iraq index up nearly a fifth on last year and the release of an oil export bottleneck on track, Iraq is looking promising for investors.

With the Iraq index up nearly a fifth last year and the release of an oil export bottleneck on track, Iraq is looking promising for investors.

The economy is set to expand 12.6 per cent this year, according to the IMF, the fastest rate in the Middle East and North Africa.

It is this speedy growth that is catching the eye of investors, to the extent that EFG-Hermes, the biggest publicly traded Arab investment bank, has started offering an equity-swap product linked to Iraqi securities.

The product could enable investors to benefit from Iraq's recovery after years of war, sanctions and suffering.

The Iraq Stock Exchange's ISX Index, on which 87 companies are listed, advanced 17 per cent last year, according to data from its website.

Iraq's main industry is the production of oil, which is up 20 per cent so far this year.

In mid-February - after a series of delays - the oil ministry finally inaugurated the country's new export terminal.

The single-point mooring (SPM) system is the first of three under construction, each due to increase Iraq's loading capacity by 900,000 barrels per day (bpd).

Breaking the export bottleneck will remove one of the key barriers that keep Iraq's oil production levels subdued, according to the country's oil ministry.

Abdul Karim Al Luaibi, Iraq's oil minister, insists the completion of the SPM will allow Iraq to boost exports by as much as 400,000 bpd by the end of next month.

In another welcome move, the Iraqi parliament has approved a US$100.5 billion budget for this year, up from $82.6bn last year.

Some $31.7bn is allocated for investment projects.

Christine Lagarde, the managing director of the IMF, said in a statement after meeting in December with Nouri Al Maliki, the prime minister of Iraq, that she was "encouraged" by this budget.

"The proposal aims to restrain the growth of current spending, thus freeing up resources for infrastructure investment and social support, while limiting the size of the budget deficit," said Ms Lagarde.

lmiller@thenational.ae