Iraq reduces debt, holds stable B credit rating

Shafaq News – Baghdad

Iraq has sustained a stable “B” credit rating — a speculative grade that signals moderate financial risk — for ten consecutive years while cutting its foreign debt to just $9 billion, Prime Minister Mohammed Shia al-Sudani’s economic adviser Mazhar Muhammad Saleh said on Monday.

Saleh told Shafaq News that remaining obligations include residual arrears from the 2004 Paris Club settlement, an international deal that restructured most of Iraq’s debt after the fall of Baath regime in 2003, as well as several commercial debts scheduled for clearance by 2028, and loans from development funds for liberated areas, which are expected to be fully repaid within the next decade.

External debt currently stands at only 7–8 percent of gross domestic product (GDP), while total public debt — domestic and foreign combined — is between 35 and 40 percent of GDP, Saleh said, noting that both figures remain far below the international safe ceiling of 60 percent.

According to Saleh, fluctuations in oil prices since 2014 forced Iraq to rely on domestic borrowing, which has now reached around 92 trillion dinars (about $64.7B), Half of that amount is held in the Central Bank of Iraq’s investment portfolio. Saleh stressed that these debts are fully covered by liquidity and foreign reserves that exceed 100 percent.