The International Monetary Fund (IMF) has approved credit facilities of $3.6bn to help Iraq cope with budget deficits during the next two years.

The new facilities were approved on 24 February, with $455m available immediately.

The fund aims to help Baghdad contain forecast budget deficits in 2010 and 2011 as it tries to rebuild the country’s infrastructure. The budget is expected to move into surplus in 2012 following higher oil production levels and prices.

The new credit facilities were also set up to ensure the government remained solvent during parliamentary elections scheduled for 7 March, which are expected to cause considerable political upheaval, says the IMF.

The loan was made using the IMF’s Special Drawing Rights, a monetary unit based on a basket of four currencies: the dollar, euro, pound and yen.

The IMF forecasts a budget deficit of 19 per cent of gross domestic product for Iraq in 2010 and 6 per cent in 2011.