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Experts warn of the risks of foreign loans
The first 01/17/2024
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Baghdad: Huda Al-Azzawi
Experts in financial and economic affairs have warned of the continuation of Iraq's external borrowing mechanism under conditions imposed by donors or lenders, which causes interference in drawing up the country's economic policies and restricting them in a way that is not proportional to preserving independence and sovereignty. The experts called for the development of a new borrowing mechanism directed to the real investment and development field.
The economic expert, Nabil Jabbar Al-Tamimi, stated in an interview with “Al-Sabah” that “the government - usually - borrows development loans from international agencies at a very low and easy interest rate, and among Iraq’s dealings with international agencies, some of them are old, dating back to the Madrid Reconstruction Agency in 2004, and there are Borrowing from the Japanese Agency, the British Agency, and the United States Agency for Development,” explaining that “these are development borrowings, and even include borrowings from the World Bank and the International Monetary Fund, all of which are very normal borrowings.”
He pointed out that "Iraq pays in installments and interest on the borrowings - which were mentioned above - approximately 10 trillion Iraqi dinars, which is equivalent to 7 billion dollars, and these borrowings do not constitute more than 25 billion dollars, which does not exceed 12.5% of the gross domestic product, and this is the size of "Reduced debt indicates good economics."
Al-Tamimi pointed out that “there may be a risk from (the Chinese agreement), in which the size of the interest is unknown, and thus it may drown Iraq in debt if it persists with increasing borrowings annually through this agreement, and this is not clear and undeclared about the size of the benefit expected from this agreement.” .
For his part, the writer and researcher in political affairs, Dr. Saif Al-Saadi, indicated in an interview with “Al-Sabah” that “Article 25 of the Constitution stipulates (the state shall guarantee the reform of the Iraqi economy according to modern economic foundations), and the government is supposed to implement this text by relying on the state’s resources.” Interior Ministry, and stated that “without a doubt, any external loan entails interest over time, and sometimes the conditions are harmful to the country’s sovereignty, especially with (Chinese loans), because they contain penal conditions in the event of non-compliance with payment within the specified time.”
He added, "Accordingly, there are economic and sovereign risks to Iraq as a result of the use of external borrowing policy in light of a huge budget estimated at 198 trillion Iraqi dinars, in addition to the presence of articles in the 2023 budget that included paragraphs that depend on external borrowing and from several countries to cover projects that are described as strategic, but unfortunately There are loans in the absence of projects.”
Financial affairs expert, Obaid Mahal, said in an interview with “Al-Sabah”: “Iraq - and twenty years ago - did not appreciate the extent of the risk of these loans in the long term, especially since these loans are not used for investment spending, and despite the fact that we are under the conditions of oil resources.” "It's good, but we're still borrowing."
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