Report: Iraq maintains its credit rating thanks to political stability and the tripartite budget, 7 SEPT

Report: Iraq maintains its credit rating thanks to political stability and the tripartite budget

The Ministry of Finance confirmed on Tuesday that Iraq maintained its credit rating of B-/B with a stable outlook, according to S&P.

According to a statement released by the ministry, Iraq has maintained its credit rating of B-/B with a stable outlook in the latest report by Standard & Poor’s (S&P) credit rating agency. The report emphasizes Iraq’s financial and economic stability.

“The new classification reflects the ongoing economic and financial reform policy pursued by the Ministry of Finance. Additionally, it is a result of maintaining a level of foreign currency reserves that exceeds the external public debt and fulfilling other external financial obligations due to the stability of crude oil prices,” she explained.

The ministry stated that the report used several indicators for its classification, with the most significant being the Iraqi parliament’s approval of the tripartite budget for the years 2023, 2024, and 2025. This budget aims to revive infrastructure projects and meet economic needs. Furthermore, the ministry added that the formation of the government at the end of 2022 has led to a state of political stability.

The report stated that a significant current account surplus is expected, which is in line with economic expectations. This surplus will further strengthen Iraq’s foreign currency reserves and support its ability to repay debt obligations over the next 12 months.

The agency has predicted that the economy is expected to grow at a rate of 2.6% annually from 2023 to 2026. This growth is attributed to an increase in oil production, which will have a positive impact on the non-oil sector. Additionally, the annual inflation rates are projected to decrease to 4% by July 2023, down from 5-6% in 2021 and 2022. This is due to the government’s efforts to revalue the currency, implement price control measures, and provide support for food and energy prices.

The report from the agency suggested that Iraq’s credit rating could be improved if the country can achieve a high rate of economic growth, diversify its public financial revenues (both from oil and non-oil sources), increase the per capita income share of national income, and continue implementing financial and economic policy reform measures.