In numbers.. A government advisor reveals Iraq’s internal and external debts
In numbers.. A government advisor reveals Iraq’s internal and external debts
2024/08/10
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, revealed the size of Iraq’s internal and external debts.
Saleh told Al Furat News Agency, “Iraq is no longer one of the highly indebted countries in terms of its external debt balance, as the external debts due for repayment during the current decade do not exceed $9 billion in all cases, and the general budget provides sufficient annual allocations to service all debts, which means paying installments and interest, according to the nature of the debt, which is called debt amortization.”
He added, “Accordingly, Iraq has not recorded any default in paying its external debt obligations over the past twenty years, as repayment mechanisms are carried out in accordance with strict financial and banking rules that are highly coordinated between the Ministry of Finance and the Central Bank of Iraq, which has shown sustainable stability in creditworthiness indicators with international rating agencies, since the adoption of the first credit rating for Iraq in 2016 until the present time.”
Saleh continued, “As for the internal debt, which amounts to nearly 78 trillion dinars or about 60 billion dollars, it is a debt existing within the government financial and banking system (exclusively) at a rate of 96%, and most of that debt was issued with debt instruments represented by government bonds of various terms and treasury transfers with a term of one year, all of which carry an interest rate not exceeding 3% annually (with the exception of the recent issues of achievement bonds or others, in which the interest rate rises between 6.5 and 8.5% annually).”
He pointed out that “mechanisms were adopted to pay interest, or pay installments of debt dues, from the annual allocations allocated in the federal general budget, and it is noted that the monetary authority, by deducting those internal government debts from it specifically, was able to liquidate them or convert them into cash by discounting them at the Central Bank of Iraq and through secondary market operations and within the scope of monetary policy work that targets growth in the money supply, regulates the liquidity of the economy, and confronts the manifestations of economic recession during the past ten years.”
He added, “The Central Bank’s possession of internal public debt instruments is estimated at (Specifically) whether from bonds or treasury transfers by about 45% of the total domestic debt.
Saleh noted that “the growth of domestic debt in particular during the last decade came as a result of two double crises, the first: the financial-security crisis between 2014 and 2017 resulting from the drop in oil prices to less than half of their expected or indicated levels in the general budget law, accompanied by the increase in the expenses of the war on ISIS terrorism, which continued until Iraq was completely liberated from the clutches of terrorism.”
He continued, “The other crisis is the financial-health crisis that worsened in early 2020 and until 2021, which witnessed a sharp deterioration in global oil prices and reached less than half of their expected price rates as well, accompanied by the correct crisis (the Corona pandemic) and the closure of the global economy, which caused a deterioration in budget revenues, whether oil or non-oil.”
He added, “Since the annual general budgets depend in their revenues on the revenues of exported oil, the revenues of which were subjected to a sharp decline during the two aforementioned double crises, the financial authority had no suitable financing refuge other than borrowing from the domestic banking market.”
He stressed that “despite the above, all of Iraq’s internal and external public debts do not exceed $70 billion today, and their ratio to the gross domestic product is about 30%, while the global standard ratio indicating the ability to bear the debt reaches 60% according to European Union standards.”
He concluded his speech by saying, “Therefore, there is effective cooperation today between the financial and monetary authorities to draw a roadmap for extinguishing the internal debt in addition to the external debt, and in accordance with the financial strengthening policy aimed at reducing the balance of public debt and reducing the annual deficit in the annual budgets and according to the standard ratios adopted globally in determining the ability to bear the debt.”
alforatnews.iq
