Iraq resort to borrowing to pay its debts

The economic crisis is still plaguing Iraq and its economy, and no doubt that the current phase is the most difficult in the history of Iraq economically , it is actually a confusing stage if we look at the facts and figures about the current situation in all its dimensions.

And the economic and financial crisis in Iraq raises doubts about the ability of this oil country to withstand, especially now that corruption has reached record levels topped the countries of the world, and Iraq, which is in second place on the level of global reserves of oil and oil accounts for the sole supplier of its hard currency, which is dependent on oil imports by more than 95% of its revenues .

Today, Iraq is facing a severe liquidity crisis led to an inability to meet its international obligations, and is seeking support from international financial organizations like the World Bank and the International Monetary Fund, to face this crisis.

The CBI recently declared that Iraq is trying to postpone the payment of debts owed to the Paris Club of creditor nations being faced with severe liquidity crisis due to weak oil prices plus the cost of the war against the state regulation “Daash” or what Iraq has lost from the devastation caused by this regulation.

According to the statement of Central Bank of Iraq, Iraq will asked creditors to postpone repayment until 2019 while waiting to receive financial support from the International Monetary Fund over the next three years.

According to Mudhiher Salih , the financial advisor to the Prime Minister, the Iraq’s debt owed to foreign government $ 15 billion, including nine billion to Paris Club members.

This borrowing came after the huge deficit in the general budget of the country for the year 2016 and the decline in the country’s revenue on the back of the collapse in oil prices since 2014, and inability of the government to fulfill its financial obligations and undoubtedly cases of looting of public money, thus the Iraqi government resorted to borrowing from the IMF on harsh conditions required the lifting of government subsidies on fuel and services prices, and rework the terms and procedures for transfers in the budget to reduce government spending, including the impact on the lives of the Iraqi simple citizen and poor classes.

The Iraq’s annual payments to the Paris Club about $ 800 million. Iraq had also issued sovereign bonds worth $ 2.7 billion worth in 2028.

According to the Iraqi government, Iraq has received preliminary approval from the International Monetary Fund in the past May to lend $ 15 billion over three years, some in the form of international bonds, and it will be secured $ 5.4 billion this year, and the rest over the next two years to help it to bridge the budget deficit.

Iraq received last year from the World Bank on a loan of $ 1.9 billion during the same year, to cover the expenses of the reconstruction of liberated areas from the grip of Sunni Islamist al «Daash» .

According to experts, this agreement has raised many questions about Iraq’s ability to repay the debts and interest on the one hand, and raised fears of the conditions imposed by creditors and some countries on Iraq on the other.

And until today , the Iraqi economy is still facing a severe crisis as a result of a number of issues on the top are the corruption, negligence and a lack of professional and quotas in sensitive jobs, and that led to the deficit of economy and decline, and today Iraq , the giant oil state, has become because of corrupt governments and a lack of planning,to resort to loans and the economy It will bear significant financial burden due to foreign loans and is in the interest imposed on it. Not to mention being a weak country and unable to run its affairs, and the economic failure has become the prominent feature accompanied by all successive governments since the US-led invasion of Iraq in 2003, and now Iraq has become at the bottom of the rankings of the failed systems , and the Iraqi citizen is either refugees abroad or internally displaced in his homeland.

Rawabet Research and Strategic Studies Center