Iraq maintains its credit rating with a stable outlook, 5 SEPT

Iraq maintains its credit rating with a stable outlook

A recent report by Standard & Poor’s Credit Rating Agency (S&P) states that Iraq’s credit rating has been maintained at B- / B, with a stable outlook, highlighting its financial and economic stability.

The Iraqi Ministry of Finance approved a report and the results were distributed in a statement. The report stated that the new classification was a reflection of the Ministry’s continuous economic and financial reforms, as well as its efforts to maintain foreign currency reserves that exceed the external public debt. The statement also mentioned that the Ministry has been fulfilling its external financial obligations due to the stability of crude oil prices.

The statement explains that the report used several indicators to classify the situation. The most important of these indicators were the Iraqi parliament’s approval of the tripartite budget for the years 2023, 2024, and 2025. This budget aims to revive infrastructure projects and economic needs. Additionally, the formation of the government by the end of 2022 has led to a state of political stability.

The report stated that there is a prediction of a significant surplus in Iraq’s current account, which is in line with economic expectations. This surplus will further strengthen Iraq’s foreign currency reserves, which will enhance its ability to service its debt in the next 12 months.

The agency is predicting an annual economic growth rate of 2.6% for the years 2023-2026. This growth is expected to be driven by an increase in oil production and its positive impact on non-oil industries. Furthermore, it is expected that the annual inflation rate will decrease to 4% in July 2023, down from 5-6% during the years 2021 and 2022. This reduction can be attributed to the government’s measures to revalue the currency, control prices, and support food and energy prices.

The agency’s report suggested that Iraq’s credit rating could improve if the country experiences high economic growth, diversifies its public financial revenues from both oil and non-oil sources, increases the per capita share of national income, and consistently implements financial and economic policy reforms.