Business | Oil & Gas
Iraq raises petrol prices 15% to keep IMF happy
Iraq has increased official petrol prices by around 15 per cent, an Iraqi official said yesterday, delivering the second hike this year to keep promises made to the International Monetary Fund.
- Reuters
- Published: 00:42 July 3, 2007
Baghdad: Iraq has increased official petrol prices by around 15 per cent, an Iraqi official said yesterday, delivering the second hike this year to keep promises made to the International Monetary Fund.
Karem Hattab, chairman of Iraq's oil products distribution company, told Reuters that the price had been lifted to 450 Iraqi dinars, or about 36 US cents, per litre, from 400 dinars.
"The price hike is in response to ongoing pressure by the IMF to cut subsidies on oil products, to be the same as neighbouring countries," he said.
Iraq has already raised prices from 20 Iraqi dinars in 2005, although prices still remain low compared with world standards.
The government is committed to phasing out fuel subsidies under a $715 million economic programme agreed with the Washington-based IMF.
The aim is to limit a thriving Iraqi black market in fuel, which is believed to channel funds to anti-US insurgents, and encourage the money currently used by the government for subsidies to be better spent.
Iraq sits on the world's third-largest oil reserves. But decades of war, sanctions, under investment and now widespread violence and sabotage have left it critically short of fuel.
As a result, the government imports much of Iraq's fuel. It paid heavy subsidies of $6 billion in 2005 and $2.5 billion last year to keep prices low, a second oil ministry official said.
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