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Iraq’s autonomous Kurdistan government looking to borrow internationally
2/6/2015
ERBIL, Kurdistan Region – Iraq’s autonomous Kurdistan Regional Government (KRG) is considering borrowing abroad “to strengthen economic infrastructure,” a Kurdish lawmaker told Rudaw. Izat Sabir, chairman of the Finance Committee in the Kurdistan parliament, said that Baghdad has suggested it would not object to the move as long as the KRG is responsible for repaying any money borrowed abroad, and that the money would be borrowed from banks in Germany and the United States “The Finance Committee has sent a report to the parliament presidency. We are waiting for the legal committee for their report. After that report the question of loans will be placed in the parliament’s agenda and will soon enter voting phase,” Sabir explained.“This loan will be an international loan and it is not meant to replace any other income,” he said. “This loan is to strengthen economic infrastructure,” he said, explaining that the budget received from the central government for the next three years was insufficient for investments in infrastructure.
“The budget does not allow the Kurdistan Region to build railroads, metro lines, dams and airports,” he added.
According to Sabir, if approved, the loans are to be borrowed from the German Deutsche bank and a US banking institution.
Although Baghdad has always objected to any moves by Erbil that would grant the KRG greater economic independence – citing fears that would encourage a bid for independence from Iraq – Sabir said that the central government was not objecting to possible loans.
“The Iraqi government has told the Kurdistan government that the KRG can take up loans, on condition that the Kurdish government will have to repay the loans on its own,” Sabir said.
Baghdad is experiencing a severe financial squeeze from a plunge in oil prices, the war with Islamic insurgents who control a third of the country – including some oil installations – and billions in missing funds due to years of corruption.
The KRG’s own economy, relying heavily on Kurdish oil exports through Turkey, has also been hard hit by the drop in crude prices. A budget freeze by Baghdad for nearly all of last year pushed the economy into a crisis. In addition, Kurdistan is reeling under the burden of 1.5 million refugees from Syria and other parts of Iraq, and the war with ISIS.
Commenting on how borrowed money would be spent, Sabir said: “We have outlined that in the report. The loan will have to be integrated into the budget in order to enhance the economic infrastructure and to develop the Kurdistan Region’s economy.
“The borrowed money is not to be spent on paying salaries. The Ministry of Finance will open a new department called ‘The Department for Running Public Loan Affairs.’ This is to make sure transparency is implemented, so that we know how the loan is spent and can monitor it,” he added.
Sabir refrained from commenting on the amount of a possible loan.
“It is better if the Kurdistan Regional Government refrains from pointing out the amount to be borrowed. A law will be passed to allow the government to borrow money. Then the government will negotiate with the banks,” he explained.
“The loan bill has outlined that the government can borrow up to $5 billion. I hope parliament members remove that clause. The bill does not need to limit the loan amount,” he said.
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2/6/2015
ERBIL, Kurdistan Region – Iraq’s autonomous Kurdistan Regional Government (KRG) is considering borrowing abroad “to strengthen economic infrastructure,” a Kurdish lawmaker told Rudaw. Izat Sabir, chairman of the Finance Committee in the Kurdistan parliament, said that Baghdad has suggested it would not object to the move as long as the KRG is responsible for repaying any money borrowed abroad, and that the money would be borrowed from banks in Germany and the United States “The Finance Committee has sent a report to the parliament presidency. We are waiting for the legal committee for their report. After that report the question of loans will be placed in the parliament’s agenda and will soon enter voting phase,” Sabir explained.“This loan will be an international loan and it is not meant to replace any other income,” he said. “This loan is to strengthen economic infrastructure,” he said, explaining that the budget received from the central government for the next three years was insufficient for investments in infrastructure.
“The budget does not allow the Kurdistan Region to build railroads, metro lines, dams and airports,” he added.
According to Sabir, if approved, the loans are to be borrowed from the German Deutsche bank and a US banking institution.
Although Baghdad has always objected to any moves by Erbil that would grant the KRG greater economic independence – citing fears that would encourage a bid for independence from Iraq – Sabir said that the central government was not objecting to possible loans.
“The Iraqi government has told the Kurdistan government that the KRG can take up loans, on condition that the Kurdish government will have to repay the loans on its own,” Sabir said.
Baghdad is experiencing a severe financial squeeze from a plunge in oil prices, the war with Islamic insurgents who control a third of the country – including some oil installations – and billions in missing funds due to years of corruption.
The KRG’s own economy, relying heavily on Kurdish oil exports through Turkey, has also been hard hit by the drop in crude prices. A budget freeze by Baghdad for nearly all of last year pushed the economy into a crisis. In addition, Kurdistan is reeling under the burden of 1.5 million refugees from Syria and other parts of Iraq, and the war with ISIS.
Commenting on how borrowed money would be spent, Sabir said: “We have outlined that in the report. The loan will have to be integrated into the budget in order to enhance the economic infrastructure and to develop the Kurdistan Region’s economy.
“The borrowed money is not to be spent on paying salaries. The Ministry of Finance will open a new department called ‘The Department for Running Public Loan Affairs.’ This is to make sure transparency is implemented, so that we know how the loan is spent and can monitor it,” he added.
Sabir refrained from commenting on the amount of a possible loan.
“It is better if the Kurdistan Regional Government refrains from pointing out the amount to be borrowed. A law will be passed to allow the government to borrow money. Then the government will negotiate with the banks,” he explained.
“The loan bill has outlined that the government can borrow up to $5 billion. I hope parliament members remove that clause. The bill does not need to limit the loan amount,” he said.
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