Baghdad (IraqiNews.com) – The recent public debate over Iraq’s internal debt-to-GDP ratio, which officially stands around 40%, overlooks a fundamental structural flaw in the Iraqi economy. Economic expert Manar Al-Obaidi argues that when calculated against the actual productive sectors, the real ratio of internal debt to GDP exceeds 120%, exposing the economy to extreme vulnerability.
Al-Obaidi stressed that the danger lies in the composition of Iraq’s Gross Domestic Product (GDP), which was estimated at 211 trillion Iraqi Dinars in 2024 (at constant prices).
The False Stability of GDP
Al-Obaidi provided a breakdown of the GDP structure, highlighting the dependence of major sectors on volatile oil revenues:
| Sector | Share of Total GDP | Dependence on Oil |
| Oil Sector | Approximately 52% | Direct |
| General Government | Approximately 10% | Highly Dependent (99% of funding from oil) |
| Productive Sectors | Approximately 35% | Indirectly Dependent |
The analysis shows that any decline in oil exports or prices immediately impacts both the oil sector and the government sector (which funds salaries and aid), causing a rapid contraction of the total GDP. The remaining productive sectors—such as telecommunications, agriculture, industry, and finance—collectively contribute only about 35% of the total GDP, or around 70 trillion Dinars.
The Real Debt Burden
Al-Obaidi argues that for a realistic financial assessment, the debt-to-GDP ratio must be calculated against the actual, non-oil, non-government productive sectors. When this is done, the debt ratio soars past the critical threshold:
- Internal Debt to Productive GDP Ratio: > 120% (Debt is about 120% of the 70 trillion Dinar non-oil, non-government GDP).
The expert emphasized that while politically challenging, this separation is essential for financial truth. To reduce the economy’s extreme fragility to global oil market shocks, Iraq must urgently work to grow the contribution of its real productive sectors.
