Tuesday, February 7, 2006

BAGHDAD — Iraq will gradually increase state-controlled domestic fuel prices tenfold this year to meet International Monetary Fund demands, Iraqi officials said yesterday.

The move is likely to spark public protests. Iraq already increased prices by 200 percent in December, igniting protests and creating a rift between the Oil Ministry and the government over external political pressure.

An IMF spokesman in Washington said Iraq would have to raise gasoline prices, but questioned the tenfold figure.

“We have to meet demands from the IMF, they said the prices should be equal to the prices in neighboring countries,” an Iraqi oil industry official said.

“The price of [gasoline] will gradually increase in 2006 to reach about 600 dinars per liter,” said a second Iraqi official.

A liter — or about a quarter gallon — of ordinary gasoline before the rise in December cost 20 dinars, or about 1.4 cents. It climbed to 50 dinars in early December.

One liter of gasoline in oil producer Saudi Arabia costs between 25 cents and 30 cents. When Iraq increases the price tenfold a liter will cost between 40 cents and 42 cents.

IMF spokesman Thomas Dawson said Baghdad would have to adjust prices further to bring fuel costs in line with neighboring countries.

“The aim is to reach a level of prices similar to those prevailing in other Gulf countries by 2007,” Mr. Dawson said. But he said there was “no basis” for the tenfold figure.

“I can’t tell you where anyone got the tenfold number,” he said.

Iraq won a crucial loan accord with the IMF in late December and a $14 billion debt swap with private lenders.

The $685 million IMF standby credit arrangement was the fund’s first ever with Iraq and is designed to support the economic program over the next 15 months.

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