Wednesday, Mazhar Muhammad Salih, the Prime Minister’s Advisor for Financial Affairs, called the World Bank’s estimate of Iraq’s debts at more than $150 billion exaggerated and unreal, and while confirming Iraq’s high creditworthiness, he stated that no failure in debt repayment timing was recorded in more than a decade.
“The issue of Iraqi public debt requires a professional distinction of its history and details, and not taking its numbers on their minds without a clear logical analysis,” Alih stated in a press statement. When measured in foreign currency, it is expected to be over $54 billion, while the external debt payable until 2028 is anticipated to be around $23 billion, with obligations due beyond 2028 bringing the total to around $30 billion.
“There is a debt pending on the Paris Club agreement of 2004, i.e. sovereign debts before 1990 belonging to four Gulf countries and four other countries, which are about $40 billion,” he added, “and if they are activated, if they are correct (because they are, as the economic terminology termed, reprehensible debts because they financed the Iraq-Iran war.” If it is right again at that time, it must be deducted by 80% or more under the Paris Club agreement for 2004, to be less than $ 9 billion or less.
And Saleh went on, remarking on the World Bank’s recent study, which said that Iraq’s debt exceeded $150 billion: “We don’t know the method of calculating the debt in the World Bank report,” he stated. Aside from that, the World Bank published a reading of Iraq’s internal and external debts that came to be around 152 billion dollars, which was exaggerated rather than being accurate. At around $84 billion (excluding the number tied to the Paris Club accord as an odious debt), and what has been stated regarding debt balances is fictitious and misleading.
“However, even in light of its unjustified inflation, the public debt-to-GDP ratio will remain between 54-57% of the estimated GDP for the year 2023, and it is within the current safe economic stability area, which is usually estimated at around 60%,” he said.
And the Prime Minister’s Financial Affairs Advisor warned, “The financial policy in Iraq adopts a highly disciplined system in adjusting the timing of payment of debt dues (annual installments and interest) or when extinguishing the debt once on its annual due dates, and there are fixed and accurately estimated annual allocations that are monitored in the budget.” The public was quick to pay debt services and dues, particularly Iraq’s foreign debts, and no failure was recorded in Iraq for over a decade and a half, which contributed to Iraq’s high creditworthiness, as Iraq is located in Area B in global credit rating tables that are evaluated by international credit rating companies. Since 2015, and on a regular basis until today.
“The vast majority of internal public debt is in the hands of government financial institutions or the government banking system, which is a (exclusive) internal governmental matter,” Saleh added. There is a strategy for dealing with this debt, especially since the monetary authority currently acquires approximately 64% of total internal debt and has the ability to manage it in coordination with financial policy and with high accuracy, keeping in mind that the banking system receives interest on that debt at a rate of 3% per year and it falls within the annual allocations of the general budget.