(MENAFN- The Peninsula) Iraq can delay payment of a final $4.6bn in war reparations for its 1990 invasion of Kuwait because of the difficulties it faces in battling the Islamic State insurgency, the UN said yesterday.
After holding a special session in Geneva, the governing body of the UN Compensation Commission (UNCC), which is handling the reparations, said "extraordinarily difficult security circumstances" in Iraq had presented "unusual budgetary challenges".
It was the first time Iraq has asked for a postponement in payments - collected as a levy on oil revenues - since the scheme was set up in 1991, and Kuwait had agreed to the deferral, the commission said.
The payment, owed to the government of Kuwait on behalf of the Kuwait Petroleum Corporation, relates to oil production and sales losses relating to the damage to oilfields that occurred during the war.
It is the final tranche of $52.4bn of reparations awarded to 1.5 million successful claimants under the UN scheme, and was due to be paid by the end of 2015.
"The decision postpones Iraq's obligation to deposit five percent of oil proceeds and five percent of the value of any non-monetary payments to service providers into the Compensation Fund until January 1, 2016," the UNCC said.
The Iraqi economy has been suffering because of the IS insurgency, with the International Monetary Fund last week predicting a contraction of 0.5 percent this year.
This year's contraction is lower than the 2.7 percent predicted in October, however, with IMF officials attributing the improved outlook to higher oil production.
The UN commission had awarded Kuwait Petroleum Corporation a total of $14.7bn in 2000 for losses during the war, the largest amount granted under the scheme.
The commission was set up by the UN Security Council in 1991, the same year that a US-led coalition drove then Iraqi leader Saddam Hussein's forces out of Kuwait.
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