Iraq's debt remains manageable, official says

Shafaq News/ Iraq's national debt, currently accounting for 35% of its Gross Domestic Product (GDP), remains within manageable limits, according to Muzher Mohammed Saleh, financial advisor to the prime minister.

In an interview with Shafaq News, Saleh said that both internal and external debts together total less than 35% of the country's GDP, which he described as being within “safe” limits based on global economic stability standards.

Addressing concerns over rising domestic debt, which has surpassed 70 trillion dinars ($53 billion), Saleh noted that Iraq’s debt is still within the European Union’s guidelines, which allow sovereign debt to reach up to 60% of GDP.

“More than 90% of the domestic debt is held by government banks, essentially borrowing from the government’s own funds for the federal budget,” Saleh explained. “This means Iraq's domestic debt is largely contained within the country’s fiscal system and poses no sovereign risk.”

Saleh also assured that the government is taking steps to prevent excessive fiscal deficits and reduce the ratio of sovereign debt to GDP gradually. Both financial and monetary authorities are working together to maintain fiscal discipline and achieve shared goals, he added.

Since 2003, Iraq has borrowed externally, particularly during the collapse in oil prices and the security operations against ISIS in 2014. Domestic borrowing has also been necessary to cover budget deficits.

The rise in domestic debt is largely attributed to two major crises: the war against ISIS from 2014 to 2017 and the economic fallout from the COVID-19 pandemic, which caused a sharp drop in oil prices and global market closures.

The Central Bank of Iraq reported that domestic debt rose to more than 73.3 trillion dinars in 2024.

The International Monetary Fund has recommended that Iraq gradually address its public finances to achieve medium-term debt stability and rebuild financial reserves.