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August 30, 2023[You must be registered and logged in to see this link.]
Baghdad / Obelisk Al-Hadath: The Advisor to the Prime Minister for Financial Affairs, Mazhar Muhammad Salih, considered the World Bank's estimate of Iraq's debts at more than $150 billion exaggerated and unreal.
Salih said that the issue of Iraqi public debt requires a professional distinction of its history and details, and not taking its numbers on their own without a clear logical analysis. Foreign debts are estimated at about 54 billion dollars, while the external debts payable until the year 2028 are estimated at about 23 billion, and there are debts due after the year 2028, so the external debt becomes about 30 billion dollars.
He added that there is a debt pending on the Paris Club agreement of 2004, i.e. sovereign debts prior to 1990 belonging to four Gulf countries and four other countries, and it is about $40 billion, and if it is activated, if it is correct (because, as the economic terminology is, reprehensible debts because it financed the Iraqi-Iranian war in Then, if it is correct again, it must be deducted by 80% or more under the Paris Club agreement of 2004, to be less than $9 billion or less.
And Saleh continued, commenting on what the World Bank mentioned in its new report that Iraq’s debt exceeds 150 billion dollars: He said we do not know the method of calculating the debt in the World Bank report. From it, the external debt reached 50 billion dollars, as an expectation of the total internal public debt early, which was not achieved, and therefore the reading of Iraq’s internal and external debts, according to what was published by the World Bank, came to be about 152 billion dollars, and this is exaggerated rather than being about 84 billion dollars (excluding the balance attached to the Paris Club agreement as an abhorrent debt) and what has been published about debt balances is unreal and discretionary.
He pointed out that, however, the public debt-to-GDP ratio, even in light of its unjustified inflation, will remain between 54-57% of the estimated GDP for the year 2023, which is within the current safe economic stability zone, which is usually estimated at 60%.
Salih noted that the fiscal 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 at its annual due dates, and there are fixed and accurately estimated annual allocations that are allocated in the general budget early to pay debt services. And its dues, especially Iraq’s foreign debts, and no failures were recorded in Iraq during a decade and a half, and this is what made Iraq’s credit worthiness high, as Iraq is located within region B in the global credit rating tables, which is periodically evaluated by well-known international credit rating companies since 2015 And until today.
He explained that the vast majority of domestic public debt is held by government financial institutions or the government banking system, which is an (exclusive) internal government affair. There is a strategy in dealing with this debt, especially since the monetary authority currently acquires about 64% of the total internal debt and has the ability to manage it. In coordination with the financial policy and with high accuracy, bearing in mind that the banking system annually obtains interest on that debt at a rate of 3%, which falls within the annual allocations of the general budget.
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