Iraq reduces external debt by more than half within two years

Iraq reduces external debt by more than half within two years

4-11-2024

Iraq reduces external debt by more than half within two yearsBaghdad – The Iraqi government announced, on Monday evening, a 50 percent reduction in external debt, renewing its determination to continue creating a qualitative shift in the Iraqi economy.

Government spokesman Bassem Al-Awadi said in a statement published by the Iraqi News Agency (INA), “As an emphasis from the government on transparency in economic work, and informing public opinion and national and international media of Iraqi economic performance, and in light of the Council of Ministers’ approval of the recommendations of the Diwani Order Committee 23942, Regarding regulating external borrowing and structuring Iraqi public external debt, the government took a series of executive measures and adopted a package of financial decisions that resulted in reducing external public debt by more than 50 percent, bringing the debt down from $19.729 billion in late 2022 to $15.976 billion. In 2023, reaching approximately $8.9 billion this year.”

He added, “These financial steps, which included stopping a number of borrowing operations due to their delay and unproductivity, organizing and managing debts and auditing them, and restructuring some debts and directing them to create strategic projects, aim to prevent the Iraqi economy from mortgaging obligations that may affect, in the future, the political decision, or the… The national development path coincides with an urban renaissance and infrastructure reconstruction, which opens the way to a promising future and a revitalized economy, in which our current and future generations perform best and obtain the greatest opportunities.”

He explained that “the government organized the process of financing cooperation with the international community in specific contexts, including direct productive borrowing, providing sovereign guarantees to ensure the production of projects carried out by the private sector for the benefit of the government, and sovereign guarantees provided by the government for the benefit of institutions that finance the Iraqi private sector importing production lines in order to build Factories inside Iraq.”

He pointed out, “These steps pave the way for our country’s further integration into the international economic cycle, and for the government to adopt the principle of productive borrowing only, which effectively leads to an increase in the domestic product, and the financing of national service and productive projects with economic returns, in a way that ensures their completion and is not delayed.” .

With these firm steps, Al-Awadi stressed that “the government renews its determination to continue making a qualitative shift in the Iraqi economy, in parallel with tangible development in the services, infrastructure and social care sectors, which are all the pillars required to meet the aspirations of our people throughout Iraq, and implement the government program with its priorities and goals.” “.

Prime Minister Muhammad Shiaa Al-Sudani has placed economic reform at the top of his government’s priorities, but he faces an uphill battle in a country where the state is the largest employer and where bureaucracy and old laws hinder the work of the private sector.

The International Monetary Fund’s confirmation in its latest assessments that Iraq was able to confront fluctuations over the past year, and that it will recover in 2024, gave the economy a strong morale boost to overcome external shocks thanks to the growth of non-oil domestic product and the strengthening of public financial management.

According to the Fund, this is represented by lower inflation rates and an improved balance of payments, as well as stimulating economic diversification and creating job opportunities led by the private sector.

The Fund expects Iraq’s non-oil GDP to grow by about 5 percent, in light of the significant expansion in public finances within the framework of the effective three-year budget law.

In a related context, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, said today, Tuesday, that “Iraq was able to reduce the external debt in accordance with the Paris Club Agreement signed in October 2004 by extinguishing more than 100 billion dollars of that debt.”

He added, “The era of the economic blockade before 2003 caused massive humanitarian damage to the Iraqi people, as the average annual per capita income fell to less than $670, which made Iraq then enter the system of poor countries that were subject to a long period of internal and external conflicts and the destruction of infrastructure that amounted to devastation.” At the Madrid donor conference for Iraq in October 2003, approximately $58 billion were allocated.

Iraq is counting on the rise in oil prices, which it depends on by about 96 percent for its financial revenues, to fill the financial deficit and reduce the size of internal and external debts, in addition to resuming work on more than 5,000 projects that have been suspended for years throughout the country’s cities, in the health, education, electricity, and water sectors. .

Iraq’s exports rose to more than 1.23 billion barrels of oil during the past year, and China and India topped the countries that bought Iraqi oil the most. The monthly oil export rate reached 102.6 million barrels, with a daily average of 3.4 million barrels, an increase of 5.36 percent over 2022 exports.

The financial advisor to the Iraqi Prime Minister revealed government measures that put Iraq at the forefront of countries in foreign investment, while pointing out that the development path and Al-Faw port strengthened the government’s vision of encouraging foreign investments.

Saleh said, “The Iraqi economy is characterized by two basic features that help give it preference in foreign investment. First, cash flows in foreign currency are reflected in the current account of the balance of payments relative to the gross domestic product, which is estimated by international economic and national centers at a surplus estimated at about 7 percent. Iraq also ranks second in OPEC’s oil production ranks fifth in the world in that production.”

He added, “As for the second advantage, there is a wide range of available investment opportunities provided by transportation, digital communications, housing, and construction activities, and it ends with encouraging partnership between the state and the private sector in the manufacturing industry and various technological fields, the latest of which was the Cabinet’s adoption of the facilitating instructions at its last meeting that encourages the existing partnership between the state.” And the private sector, which is based on the principle of win-win and is an attractive signal for foreign direct investment.”

He pointed out that “the investment law frames the provision of an attractive investment environment for investors, especially the economic surplus trends of the countries of the region and their orientation towards profitable investments in Iraq in the industrial, agricultural and other fields, which gives a positive signal to international investment in general to be attracted towards Iraq and investigate promising opportunities there.”

He explained, “Iraq is ranked ninth in the world in terms of natural resources underground, and ranked first in reserves per square kilometer of investable natural resources such as (phosphate, sulfur, and other important reserves).

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