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The credit rating of Iraq and the dangers of borrowing
Abdul Hussain Hinan
The credit rating of Iraq and the dangers of borrowing
Abdul Hussain Hinan
The credit rating agencies private financial firms issued periodic reports reflect what it called the creditworthiness of a country or an organization, and show the importance of reports in that they affect the confidence of investors in this country or organization positively or negatively by indicating its ability to borrow from the financial markets.
A few days ago confirmed the credit rating agency Global S & P (Standard & Poor's Financial Services LLC ), a Alone the three largest companies in the world in this area, classified Iraq credit when (B- / B) with a stable outlook, and is not a welcome boost foreign investment at the moment as the degree classification offers investors a roadmap for their investments in the country, especially in the bond trading process as they determine to do so wide circulation in the global bond markets after identifying risks.Nevertheless it is acceptable stage commensurate with the reality of Iraq economist who expects GDP growth to fall to less than 2% levels in 2017 to 2019 as a result of the negative effects of what the government of the measures in the fiscal policy offset weak domestic demand in contrast to what they offer us Ministry Iraqi planning of deceptive statements in addition to the insistence of the Iraqi Central Bank to adopt a biased product of foreign monetary policy, but something good is that Iraq has entered the list of the credit rating for the first time to get a first grade credit rating in its history in September 2015 because it did not previously own degree credit rating because of the wrong wars and economic policies of the former regime time andthen the financial mess phase after 2003 in terms of corruption and waste prevailed in the process of Iraqi funds management.
this classification financially accomplishing for Iraq , which was the most important causes great pressure that the United States practiced by the international financial institutions to incorporate Iraq into theinternational community and especially in international financial transactions. It can move encouraged Iraqis as individuals, companies and the government to improve the level of Iraq 's credit if we walk way an adult in money management and put restrictions best on corruption and if we turned to the people has a good ability to understand the numbers.
In order to understand the reality of credit and its impact must be meaningful credit rating understand in general he is measuring the degree of risk while the financial deal with the person or company or country, providing a realistic view of the ability of the state or the people or companies to repay the loans they borrowed from the donor financial institutions and how to estimate interest rates depending on the degree ofrisk greater the risk increased interest on loans ratio because the most important main objectives of thereports of the credit rating is to guide investors on how to return on the money that will be invested in theform of loans to countries or companies account, and can be a short - term rating reflecting the high capacity of the state or the company or individuals to repay loans due within one year from the date of the rating, or itmay be a long - term , a term for repayment ability in a long time, and there are many financial institutions that provide annual reports on the credit rating , but the three most important adult that dominate the ratings market in the world and they are both Moody 's (Moody's) and Standers & Poor 's and Fitch Ratings (Fitch) and all US institutions.
decline of Iraq 's credit rating reflects the low potential for Iraq to repay the debt, then the risk ratio is high for lending, and vice versa, when the heightened risks of financial institutions are advised to impose high interest rates on loans may be the advice not to grant loans basically, and can be described as Iraq 'sfinancial Palmtzbzb mode or between stable and anxiety and a need to take a mature economic and financial measures to help in our move to a better position relatively stable.
credit rating varies from enterprise to another , but what concerns the organization that developed classification Iraq finally They (S & P) that the highest degree classification has is AAA, and this means that the risks are almost non - existent in the process of granting loans , which imposes a very low rate of interest, and then comes the AA + and AA and a + and a and A-, and this represents the first level of classification, the second level begins to BBB + and BBB , and BBB- and BB + and BB and BB- and b + and b and finally B- and when the classification under the BBB- investment is high risk , which imposes very high interest rates on loans (Iraq is currently located within this level) .
the third level is CCC + and CCC then CCC- and CC and C first, second and Darjtan mean that the degree ofrisk is very high but if it has reached the case to CCC- means that the risk inevitable and that the likelihood of the borrower 's ability to repay is very weak debt, expressing the latter level a, IV D on the state ofbankruptcy and the impossibility of the borrower 's ability to repay debt. And that the state or the company that fall within this level are out of financial institutions accounts.
From this it is clear that Iraq is still in a relatively stable, relatively far from the risk of bankruptcy mode, but it does not constitute a factor contentment with teenager political class in understanding the meaning of thestate. In order to ensure improved and put the credit must work to improve the performance of the Iraqi economy , the gradual transition from a rentier state holding the money and power to the State of thecollection services will be private sector is the engine and the actual commander of the economy. It issurrounding us risk is if we consider the opinion of these companies in Iraq 's financial position imminent certified to prove that we are fine it means that we still do not realize the size of responsibility in running thecountry financially, because these companies have been committed earlier disastrous errors, and suffered because of it to the criticism of which contribute part in the financial crisis in 2008 because of reports that have reduced the size of financial risks in the area of mortgages in the United States, where he was given credit rating agencies assessments are incorrect Souktha major US banks and securities among the causes of the outbreak of the mortgage loan crisis in the United States in 2008, which was the spark that ignited theglobal financial crisis. Also directed to the finger in the worsening of the sovereign debt crisis in the euro zone as a result of the announcement of successive cuts to classify a number of troubled countries, as a result ,the public prosecutor has proceeded in upstate New York in May 2010 an investigation with officials in several major banks such as Citigroup (Citigroup Inc ) and Goldman Sachs (GS Bank USA) and Morgan Stanley (Morgan Stanley) about the possibility of doing misled ratings agencies about the creditworthiness of bonds related to subprime loans for gains, as granted by the high ratings before it turns out to be not worthy of the high rating.
In the midst of conflict the international financial and economic was an opportunity for the president of theChinese credit rating Guan Jianzng to criticize harshly the US rating agencies that dominate the market rating for causing the financial crisis, saying that China should have a say in how to classify governments and debt, where the description of those institutions as politicized pretty much it favors Western countries and violates the standards laid down by them as constraints in their work, but he said in regards aligned contrary to what has happened in the US and global markets turmoil and a wave decline after lowering Corporation (S & P) rating the US government in June 2011, this was the decision means that the US administration bonds is worthy of the Premier classification AAA, and confirms that there is a possibility not to Washington 's ability to repay its debt, or at least delay the payment, which attributed the Standard & Poor 's this cut to the inability of Washington to reduce the size of its debt sovereign huge, and who was then equal to three - quarters thesize of the US economy, and the results of this financial and economic conflict also increased claims in Germany to establish an independent European rating agency in order to get rid of the dominance of theinstitutions of the US, came the calls after the cut by Standard & Poor 's rating for its excellent nine European countries and the European financial Stability Facility from AAA grade to grade AA.
finally , the important question remains: Do we need to rating agencies? The answer is simply yes without hesitation, but it requires greater transparency and improved performance and stricter than regulatory bodies, and we must not look for them by the state that they provide absolute measures of risk, but on the state establish a special assessment of the financial down our institutions and put economic in general by Iraqi experts skilled possess a great deal of independence and courage.
this classification financially accomplishing for Iraq , which was the most important causes great pressure that the United States practiced by the international financial institutions to incorporate Iraq into theinternational community and especially in international financial transactions. It can move encouraged Iraqis as individuals, companies and the government to improve the level of Iraq 's credit if we walk way an adult in money management and put restrictions best on corruption and if we turned to the people has a good ability to understand the numbers.
In order to understand the reality of credit and its impact must be meaningful credit rating understand in general he is measuring the degree of risk while the financial deal with the person or company or country, providing a realistic view of the ability of the state or the people or companies to repay the loans they borrowed from the donor financial institutions and how to estimate interest rates depending on the degree ofrisk greater the risk increased interest on loans ratio because the most important main objectives of thereports of the credit rating is to guide investors on how to return on the money that will be invested in theform of loans to countries or companies account, and can be a short - term rating reflecting the high capacity of the state or the company or individuals to repay loans due within one year from the date of the rating, or itmay be a long - term , a term for repayment ability in a long time, and there are many financial institutions that provide annual reports on the credit rating , but the three most important adult that dominate the ratings market in the world and they are both Moody 's (Moody's) and Standers & Poor 's and Fitch Ratings (Fitch) and all US institutions.
decline of Iraq 's credit rating reflects the low potential for Iraq to repay the debt, then the risk ratio is high for lending, and vice versa, when the heightened risks of financial institutions are advised to impose high interest rates on loans may be the advice not to grant loans basically, and can be described as Iraq 'sfinancial Palmtzbzb mode or between stable and anxiety and a need to take a mature economic and financial measures to help in our move to a better position relatively stable.
credit rating varies from enterprise to another , but what concerns the organization that developed classification Iraq finally They (S & P) that the highest degree classification has is AAA, and this means that the risks are almost non - existent in the process of granting loans , which imposes a very low rate of interest, and then comes the AA + and AA and a + and a and A-, and this represents the first level of classification, the second level begins to BBB + and BBB , and BBB- and BB + and BB and BB- and b + and b and finally B- and when the classification under the BBB- investment is high risk , which imposes very high interest rates on loans (Iraq is currently located within this level) .
the third level is CCC + and CCC then CCC- and CC and C first, second and Darjtan mean that the degree ofrisk is very high but if it has reached the case to CCC- means that the risk inevitable and that the likelihood of the borrower 's ability to repay is very weak debt, expressing the latter level a, IV D on the state ofbankruptcy and the impossibility of the borrower 's ability to repay debt. And that the state or the company that fall within this level are out of financial institutions accounts.
From this it is clear that Iraq is still in a relatively stable, relatively far from the risk of bankruptcy mode, but it does not constitute a factor contentment with teenager political class in understanding the meaning of thestate. In order to ensure improved and put the credit must work to improve the performance of the Iraqi economy , the gradual transition from a rentier state holding the money and power to the State of thecollection services will be private sector is the engine and the actual commander of the economy. It issurrounding us risk is if we consider the opinion of these companies in Iraq 's financial position imminent certified to prove that we are fine it means that we still do not realize the size of responsibility in running thecountry financially, because these companies have been committed earlier disastrous errors, and suffered because of it to the criticism of which contribute part in the financial crisis in 2008 because of reports that have reduced the size of financial risks in the area of mortgages in the United States, where he was given credit rating agencies assessments are incorrect Souktha major US banks and securities among the causes of the outbreak of the mortgage loan crisis in the United States in 2008, which was the spark that ignited theglobal financial crisis. Also directed to the finger in the worsening of the sovereign debt crisis in the euro zone as a result of the announcement of successive cuts to classify a number of troubled countries, as a result ,the public prosecutor has proceeded in upstate New York in May 2010 an investigation with officials in several major banks such as Citigroup (Citigroup Inc ) and Goldman Sachs (GS Bank USA) and Morgan Stanley (Morgan Stanley) about the possibility of doing misled ratings agencies about the creditworthiness of bonds related to subprime loans for gains, as granted by the high ratings before it turns out to be not worthy of the high rating.
In the midst of conflict the international financial and economic was an opportunity for the president of theChinese credit rating Guan Jianzng to criticize harshly the US rating agencies that dominate the market rating for causing the financial crisis, saying that China should have a say in how to classify governments and debt, where the description of those institutions as politicized pretty much it favors Western countries and violates the standards laid down by them as constraints in their work, but he said in regards aligned contrary to what has happened in the US and global markets turmoil and a wave decline after lowering Corporation (S & P) rating the US government in June 2011, this was the decision means that the US administration bonds is worthy of the Premier classification AAA, and confirms that there is a possibility not to Washington 's ability to repay its debt, or at least delay the payment, which attributed the Standard & Poor 's this cut to the inability of Washington to reduce the size of its debt sovereign huge, and who was then equal to three - quarters thesize of the US economy, and the results of this financial and economic conflict also increased claims in Germany to establish an independent European rating agency in order to get rid of the dominance of theinstitutions of the US, came the calls after the cut by Standard & Poor 's rating for its excellent nine European countries and the European financial Stability Facility from AAA grade to grade AA.
finally , the important question remains: Do we need to rating agencies? The answer is simply yes without hesitation, but it requires greater transparency and improved performance and stricter than regulatory bodies, and we must not look for them by the state that they provide absolute measures of risk, but on the state establish a special assessment of the financial down our institutions and put economic in general by Iraqi experts skilled possess a great deal of independence and courage.
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