Iraq's foreign debt more than halved in two years

The Iraqi government has recently announced a 50% reduction in foreign debt, also highlighting its determination to continue to create a qualitative change in the Iraqi economy.

According to Iraqi government spokesman Bassem Al-Awadi, the executive took a series of executive measures and adopted a package of financial decisions that achieved "the reduction of the external public debt by more than 50%, reducing the debt from $19.729 billion at the end of 2022 to $15.976 billion in 2023, reaching approximately $8.9 billion in the current year".  

As he explained to the Iraqi news agency (INA), "these financial measures included halting a number of debt operations due to their delay and lack of productivity, organising and managing debts and auditing them, restructuring some debts and directing them towards the creation of strategic projects". Al-Awadi stressed that "the path of national development coincides with an urban renaissance and infrastructure reconstruction, which opens the way to a promising future and a revitalised economy". 

According to the government spokesman, the aforementioned measures "pave the way for Iraq's further integration into the international economic cycle" and boost "the growth of domestic output and the financing of national expenditures". 

Through these moves, Al-Awadi stressed that the government will renew "its determination to continue to make a qualitative change in the Iraqi economy, in parallel with tangible development in the service, infrastructure and social welfare sectors". 

Iraqi Prime Minister Muhammad Shiaa Al-Sudani has placed economic reform at the top of his government's priorities. However, despite the authorities' efforts, Baghdad still faces challenges related to bureaucracy and obstacles to the private sector. 

The International Monetary Fund, in its latest assessments, has indicated that Iraq was able to cope with fluctuations over the past year and will recover by 2024, giving the economy a strong morale boost to overcome external shocks through growth in non-oil domestic product and strengthened public financial management.  

According to the economic body, this improvement has been made possible by lower inflation rates and an improved balance of payments, as well as stimulus to economic diversification and private sector-led employment opportunities. 

On the other hand, the prime minister's financial adviser, Mazhar Muhammad Saleh, said that "Iraq was able to reduce its external debt in accordance with the Paris Club Agreement signed in October 2004, extinguishing more than $100 billion of that debt". 

"The pre-2003 economic blockade era caused massive humanitarian damage to the Iraqi people, as the average annual per capita income fell to less than $670, bringing Iraq into the system of poor countries that were subject to a long period of internal and external conflicts," he added. 

Iraq is counting on rising oil prices - on which it relies for about 96% of its financial revenues - to cover financial deficits and reduce the size of internal and external debts, in addition to resuming work on more than 5,000 projects that have been suspended for years in all of the country's cities in the health, education, electricity and water sectors. 

Iraq's exports rose to more than 1.23 billion barrels of oil last year. China and India were the biggest buyers of Iraqi oil, with monthly exports reaching 102.6 million barrels, with a daily average of 3.4 million barrels. This represents an increase of 5.36% compared to exports in 2022.   

In addition to the oil sector, the Iraqi prime minister's financial adviser revealed government measures that seek to stimulate foreign investment in the country. 

"There are a large number of investment opportunities available in the fields of transportation, digital communications, housing and construction activities," Saleh stressed, who also highlighted the "profitable investments in Iraq in the industrial and agricultural fields". He also recalled that "Iraq ranks ninth in the world in terms of underground natural resources and first in reserves per square kilometre of investible natural resources such as phosphate, sulphur and other important reserves," he concluded.