Article: “The World Bank will lend Iraq three billion dollars as “very low interest rates,” the end of 2016”
This is a good sign.
A loan by the WB for a long term and low rate shows not only support and confidence in Iraq as it continues to rebuild it’s economic infrastructure but it also demonstrates trust and faith in Iraq’s ability to repay…
Lending and borrowing is what the global economic machine is all about.
For the lender, interest income and for the borrower, stimulus to push progress/growth as quickly as possible and the kind that ensures the ability to repay is in place and protected.
This shows us once again Iraq is continuing to mature economically.
It continues to prove that a lop or re-denomination due to a failing economy is not the case for Iraq.
This shows us and demonstrates to future investors that Iraq is a vital participant in the global economic construct.
See the trees in the forest!
It’s all good.
[With all of this confidence why are they stuck at a B rating? Any idea when that would increase?]
Rating agencies assess how likely a borrower is to be able to repay its debts and help those trading debt contracts (e.g., loans) in the secondary market (to investors).
It takes a lot to change a rating and I suspect their rating will not go beyond the lower end of investment grade until they have a more diversified industrial output.
Having their economy rely almost entirely on oil presents risk.
As their agriculture continues to return and as infrastructure and commerce grow, they will demonstrate a more balanced country.
That said, it’s all about the data.
As Iraq continues to repay loans with ease, demand in the secondary market will likely grow which in turn will pave the way for Iraq to fully participate no matter their rating.
