ANALYSIS OF IRAQ NEWS: With an increase in recent months.. Iraq's internal debt exceeds 78 trillion dinars - Urgent BY DINAR REVALUATION, 15 AUGUST

 With an increase in recent months.. Iraq's internal debt exceeds 78 trillion dinars - Urgent

The financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed today, Wednesday, that Iraq's internal debt exceeds 78 trillion dinars, with an increase in recent months.

Saleh said in a statement to (Al-Rabia) that "Iraq's move towards borrowing from the domestic banking market to finance two waves of the general budget deficit came under the influence of the decline in the oil assets cycle and in two different periods during the current decade. The first wave of borrowing, which amounted to nearly 27 trillion dinars, was financed by the government banking system through purchasing treasury transfers during the intensification of the security crisis (the entry of the terrorist ISIS) between the years 2014-2017."

He added that "the International Monetary Fund estimated at that time the current account deficit gap of the balance of payments due to the decline in oil prices to be no less than 18 billion dollars cumulatively during those years, and the second wave occurred between the years 2020 and 2021, that is, during the health crisis with the spread of Corona and the closure of the global economy, which was accompanied by a decline in oil prices and a decline in budget revenues and the loss of more than 40% of the value of the oil barrel

While the legislation of the general budget law for the fiscal year 2020 was absent and was replaced by three legislations to finance the deficit, two of which were for direct domestic borrowing and two separate laws issued by the House of Representatives, that by heading towards the domestic borrowing market and the other is the Food Security and Development Law, and an important aspect of it was based on domestic borrowing as well, which raised the level of domestic debt to exceed the barrier of 78 trillion dinars."  link

ANALYSIS

Iraq's internal debt has indeed risen sharply, surpassing 78 trillion dinars recently. This increase is largely due to two significant periods of economic strain.

1. 2014-2017: During this time, Iraq faced severe financial pressure due to the rise of ISIS and a drop in oil prices. The government borrowed approximately 27 trillion dinars from domestic banks to cover the deficit caused by these challenges.

2. 2020-2021: The COVID-19 pandemic further exacerbated economic difficulties, with falling oil prices and decreased budget revenues. During this period, Iraq enacted several laws, including the Food Security and Development Law, which relied heavily on domestic borrowing. This pushed the total internal debt above 78 trillion dinars.

These borrowing waves were necessary due to reduced oil revenues, which are crucial for Iraq’s economy, and the need to finance the budget deficits arising from various crises.