Tuesday, October 1, 2024
Navigating debt: Iraq tackles external borrowing amid soaring domestic financial pressure, 1 OCT
Shafaq News/ The Iraqi government has enacted several measures aimed at reducing external public debt, leveraging financial surpluses from increasing oil prices to achieve success in this endeavor. However, domestic debt has surged to over 70 trillion dinars to bridge liquidity gaps and meet operational expenses.
Following the 2003 US invasion, Iraq has continued to rely on external borrowing, particularly during the oil price collapse in 2014, which coincided with military operations against ISIS. Internal borrowing has also been employed to address the country’s budget deficit.
The International Monetary Fund (IMF) highlighted that internal imbalances in Iraq have intensified due to substantial fiscal expansion and declining oil prices, underscoring “the need to gradually correct the fiscal situation to stabilize the debt in the medium term and rebuild the financial reserves.”
Dead Debts
Jamal Coujar, a member of the Parliamentary Finance Committee, characterized the external debt as “dead debt.”
In an interview with Shafaq News, he explained that it relates to the Gulf War and dates back over 30 years. “Countries are not demanding it. Therefore, it is not real debt, and if Iraq were to request its cancellation, it would be canceled,” he stated.
Cojar noted that the internal debt, which exceeds 70 trillion Iraqi dinars, is gradually increasing due to state revenues being lower than expenses. However, he reassured that “it is not alarming debt.
According to official data, Iraq’s internal debt amounts to approximately $50 billion, settled within the official financial and governmental apparatus. Additionally, Iraq has outstanding debts to eight countries, including Iran, Saudi Arabia, Qatar, the UAE, and Kuwait, totaling $40 billion. These debts are questioned in terms of validity from Iraq’s perspective and have not been canceled despite being subject to the Paris Club’s oversight.
Low External Debt
Mudher Mohammad Saleh, the financial advisor to the Iraqi Prime Minister, stated in an interview with Shafaq News that “Iraq is among the countries with very low external debt, with total payable debts not exceeding 10 billion dollars.” He highlighted that these debts have annual allocations in the federal budget for repayment, which must be settled by 2028.
Saleh noted that “the external debt consists of remnants from settlements before 1990,” emphasizing that “Iraq is considered to have strong financial credibility, with a high credit rating according to global agencies such as S&P and Fitch.” He added that the external debt constitutes less than 5% of Iraq’s GDP, in contrast to the global standard, which permits debt levels up to 60% of GDP.
Moreover, Saleh pointed out that “there is internal debt amounting to 76 trillion dinars,” primarily caused by two financial crises: the first occurring between 2014 and 2017 due to the war against ISIS and declining oil prices, and the second being the COVID-19 pandemic, which led to the closure of global markets and a significant drop in oil prices, resulting in extensive borrowings.
He emphasized that "the general internal debt does not exceed 30% of GDP and is a debt within the government, not between the government and individuals or the market.” Saleh assured that there are mechanisms for its repayment within the government banking financial system, thus indicating that there are no associated risks.
Debt Is Not the Ideal Solution
Economic expert Durgham Muhammad Ali holds a contrasting view to the financial advisor regarding Iraq’s internal debt situation. In an interview with Shafaq News, he warned that “internal debts pose a risk, as they are due for repayment and should not exceed 50% of the country's annual gross output.”
He stated, “Expanding internal borrowing is not the ideal solution to cover the budget deficit; it is an easy way to address the deficit through primitive but effective means, as long as it does not exceed the required limit, especially given the decline in financial inclusion and the low rates of banking deposits among Iraqi citizens compared to neighboring countries.”
Ali further noted the urgency of combating corruption, “the fight against corruption and the recovery of Iraq’s funds that have been lost over the years are slow and ineffective, facing obstacles and challenges. Recovering these funds could cover a significant portion of the internal debts.”
Hard Currency
Economic expert Hilal Al-Taan told Shafaq News that “internal debts do not have a significant impact on the Iraqi economy, as most of them are owed to the Ministry of Finance, the Central Bank, and other ministries.” He confirmed that “the significant impact on the economy comes from external debts because their repayment requires hard currency, whereas internal debts are repaid in the national currency.”
Al-Taan further highlighted that the bulk of the internal debt is owed to the Central Bank of Iraq, along with the Al-Rafidain and Rashid banks, and the Trade Bank of Iraq. These institutions have lent substantial amounts to the government to cover the federal budget deficit, underscoring the need for the state to prioritize reducing external debts first.
• 1 Iraqi Dinar equals about 0.0008 USD
RV UPDATE BY JON DOWLING, 1 OCT
Jon Dowling
Get your popcorn ready, enjoy the show, get your popcorn ready, to learn the things you didn’t know!
Supply chain shortages begin in the east coast tomorrow.
Tomorrow is the first day for the new fiscal year for the western world. XRP is exonerated next Monday.
Supreme Court reconvenes October 17th, 17th did you catch that? And BRICS 22nd-24th.
The jog is up! Be ready!👀 ✅🙏🙏🙏
Iraqi Foreign Minister: We must stay away from the wars taking place in the region, 1 OCT
Iraqi Foreign Minister: We must stay away from the wars taking place in the region
Shafaq News/ Deputy Prime Minister and Minister of Foreign Affairs, Fuad Hussein, confirmed during a ministerial meeting in Washington that Iraq is immune to war in the region, pointing out that wars contribute to creating a state of chaos that is exploited by terrorist organizations such as ISIS.
The media office of the Ministry of Foreign Affairs said in a statement received by Shafaq News Agency, “Hussein stressed during his intervention today, at the ministerial meeting of the countries of the international coalition to defeat the terrorist organization ISIS, held in Washington, that Iraq must be kept away from the wars taking place in the region.”
Hussein pointed out the “Iraqi government’s deep concern about the current situation in the Middle East, especially in Gaza and Lebanon,” warning that “wars contribute to creating a state of chaos that terrorist organizations such as ISIS exploit, or produce a new version of it.”
He added, “Wars create chaos and increase the number of refugees and displaced persons, which doubles the humanitarian crises in the region.”
He expressed his concern about “the use of social media platforms by terrorist organizations, most notably ISIS, as a tool for spreading their ideas and recruiting. He stressed the need to combat the organization not only on the ground, but also on social media platforms, warning that the continued use of these platforms without oversight could exacerbate terrorist threats.”
At the end of his speech, the Minister stressed “the importance of coordination between the member states of the coalition to confront ISIS by all means, including via the Internet, to ensure a comprehensive victory over terrorism.”
Redemption center staff will be on duty this weekend BY WOLVERINE, 1 OCT
WOLVERINE
Redemption center staff will be on duty this weekend.
Iraq bond holders will have their new lower denomination currency accessed to their accounts on Tuesday, October 1.
Tier4b (we, the Internet group) will receive email notifications via the 800 number on Monday, September 30. They should appear within three hours.
The call center will direct you to
exchange center where you will change.
Change appointments will be set from Tuesday, October 1 onwards.
R&R assignments are already in place
deposited into your Quantum account. You transfer that money to your bank with your Quantum card that you will receive at your appointment.
Both banks and exchange centers have on their screens the 14 currencies that will increase in value.
TRANSLATION IN SPANISH
WOLVERINE
El personal del centro de canje estará de guardia este fin de semana.
Los titulares de bonos de Irak tendrán su nueva moneda de denominación más baja tendrán acceso a sus cuentas el Martes 1 de Octubre .
Tier4b (nosotros, el grupo de Internet) recibirá notificaciones por correo electrónico a través del número 800 el lunes 30 de Septiembre . Deberían aparecer en un período de tres horas.
El centro de llamadas lo dirigirá al
centro de canje donde cambiará.
Las citas de cambio se fijarán a partir del Martes 1 de Octubre en adelante.
Las asignaciones de R&R ya están
depositadas en su cuenta Quantum. Usted transfiere ese dinero a su banco con su tarjeta Quantum que recibirá en su cita.
Tanto los bancos como los centros de canje tienen en sus pantallas las 14 monedas que aumentarán de valor.
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