PM’s Advisor:
The Prime Minister’s Financial Advisor, Mudhar Mohammed Salih, confirmed on Thursday that Iraq’s external debt is at its lowest level compared to many neighboring countries.
Saleh told the Iraqi News Agency (INA): “The general indicators of the Iraqi economy have improved over the past two years, thanks to a number of interconnected factors, most notably the relative stability of oil revenues at acceptable levels, which provided a stable funding base for the general budget, and improved public spending management through re-prioritizing reconstruction and infrastructure projects and focusing on the service and production sectors within the government program.”
He added, “This came alongside the activation of financial and administrative reform tools launched by the Central Bank and the Ministry of Finance, whether through electronic payment systems, expanding the non-oil revenue network, or controlling border crossings and customs through automation. This is in addition to the stability of the exchange rate and controlling inflation within internationally accepted limits, which has strengthened monetary and financial confidence in the national economy.”
He continued, “The Prime Minister’s assertion that the financial and economic situation is at its best reflects a significant improvement in the management of the financial cycle, and is a solid prelude to comprehensive structural improvement.” He explained that “the national economy has demonstrated its ability to efficiently and transparently utilize its resources, and looks forward to establishing a sustainable development economy on solid foundations, particularly within the framework of the Development Road Project.”
He pointed out that, regarding the decline in the fiscal deficit to 34 trillion dinars, this decrease represents a significant shift from the annual deficit levels, which were estimated to be between (60-64) trillion dinars annually.
He pointed out that “the current government’s total government debt did not exceed (34) trillion dinars over the past three years, as a result of gradual fiscal policies that can be summarized in three main mechanisms, the most important of which are:
Increasing non-oil revenues by improving tax and customs collection through automation and preventing financial evasion, enhancing the capacity to collect fees for government and municipal services, controlling waste in public institutions, improving collection efficiency, rationalizing public spending by rationing unnecessary operating expenditures, prioritizing the initiation of investment projects of productive and service importance, adopting the principle of “daily cash management” in spending to reduce short-term debt, and enhancing internal liquidity by increasing reliance on domestic borrowing when needed through local debt instruments (bonds, treasury transfers) instead of external financing.”
He explained that “this was accompanied by an increase in the Central Bank’s reserves of Foreign currency, which provided the government with greater fiscal space through the dinar window, in addition to increased coordination between fiscal and monetary policy, ensuring sustainable financing without inflationary pressures.
He emphasized that “the reduction in the estimated deficit rates in General Budget Law No. (13) of 2023 (the Triennial Budget) was achieved not only due to a significant increase in oil revenues, but also as a result of gradual reform in public finance management and improved cash flows between institutions.”
He added that “the reading of the external debt in the Prime Minister’s speech was technical and analytical, as the external debt did not exceed $13 billion, which is a very low level compared to many countries, including neighboring countries. This reflects that the external debt burden on Iraqi finances is limited, and that the structure of public debt is more inward-looking (in dinars) than outward-looking (in dollars).”
Saleh concluded by saying: “The frequent talk about the risk of external debt is often used in political or electoral contexts and does not reflect the true financial situation, especially given that Iraq possesses foreign exchange reserves exceeding $100 billion at the Central Bank of Iraq, which cover the external debt by multiples in terms of efficiency indicators. “Foreign and internationally recognized monetary reserves.”
