Shafaq News - Baghdad

Iraq’s Central Bank (CBI) moved on Sunday to dispel concerns over the country’s debt, stating that external liabilities remain under $13 billion, far below figures cited in public debate, and that the actual fiscal deficit is considerably smaller than planned.

The bank said the three-year federal budget (2023–2025) projected a deficit of 191.5 trillion dinars (about $145 billion), but the real gap was just 35 trillion dinars (about $26.6 billion), financed domestically through bonds and treasury transfers. Actual borrowing represented only 18.2% of the planned shortfall — a reflection, it said, of “strong coordination” between fiscal and monetary authorities to keep debt under control.

After excluding unresolved pre-2003 obligations, Iraq’s foreign debt stands below $13 billion, and the country has “never defaulted on its payments,” maintaining a solid credit reputation regionally and internationally, the statement added.

Domestic public debt amounts to 91 trillion dinars (about $70 billion), of which 56 trillion accumulated by end-2022 and 35 trillion added under the current budget cycle. Most of it is held within state-owned banks. The bank said specialized committees and international advisors are working to convert portions of these debts into investment instruments under a planned national debt-management fund.

Iraq’s overall debt-to-GDP ratio remains below 43%, a level the bank described as “moderate and safe” by international standards. It pledged to deliver a comprehensive outlook on fiscal sustainability, aligning with government reforms to diversify revenue and reduce oil dependence.

The statement follows parliamentary remarks from CBI Governor Ali al-Alaq, who told lawmakers that total internal and external debts approach $150 billion, with domestic liabilities at 91 trillion dinars and foreign debt near $54 billion. He also disclosed that Iraq holds $11 billion in US Treasury bonds and faces a “very large” budget deficit that cannot be covered solely through borrowing.