Iraq’s debt has exceeded $160 billion after the fiscal deficit law was approved, while the foreign public debt alone ranges between $60-70 billion.
MP Abdul Hadi al-Saadawi, member of the Iraqi parliament’s finance committee, said on Sunday that the majority of the country’s debt is external.
According to previous statements in early November, Finance Minister Ali Abdul Amir Allawi said Iraq’s foreign debt is estimated between $60 and $70 billion, while the internal debt amounts to $100 billion.
This comes amid parliamentary warnings from the government’s borrowing policy, which would eventually lead to bankruptcy.
Allawi explained that half of this amount was inherited and the other was added after 2003 for various purposes, including project financing.
The financial crisis suffered by Iraq is the result of the decline in oil prices and the consequent reduction in production, which affected its revenues, Allawi noted, adding that the reduction in oil exports has also caused an increase in the dues of oil contracts and licenses companies.
This has prompted the Finance Ministry to request the Iraqi parliament to issue an internal borrowing law with a 41 trillion dinars ceiling to reduce the deficit in salaries and expenses, such as the import of electricity and fuel, foreign debt, and others.
Allawi affirmed the new loan will cover salaries and expenses for the remainder of 2020 and the first two months of 2021.
He said the current government faced this crisis without any financial liquidity. For this reason, it can only rely on internal borrowing for the short term.
He further noted that the foreign borrowings, which amounted to $5 billion shall be allocated to finance projects.
Allawi warned that the monthly revenues generated from exporting oil, along with the funds in his ministry, are not sufficient to cover the salaries of all employees.
The Finance Ministry has repeatedly warned that the government’s current revenues are insufficient to meet current expenditures in light of low oil prices and Iraq’s commitment to the decisions taken by the Organization of Petroleum Exporting Countries (OPEC) and its allies on reducing oil production.