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.. International bond between the snare of debt financing
10/13/2015 0:00
Dr.. Acer Yassin
much-discussed in the past months since the global decline in oil prices on the importance and the risks of borrowing Iraq amounts of cash from abroad in order to cover part of the general budget and the functioning of the government deficit.
And among the opponents of the project borrowing from abroad and supporters, stand first prominent obstacles, a high interest rate for this external borrowing of up to 11.5 percent of the amount will not exceed a billion and a half billion dollars, which is fraught with financial and political commitments far outweigh the effect desired effect. That is synonymous with the decisions of investment funds can not be that there will be investment without financing, and financing here may be externally or internally, or both, if were not internal sources of financing, which is the saving mandatory or optional sufficient or the government in a particular country is unable or unwilling to take the decisions that are required for the high level of these savings to the level commensurate with the requirements of economic development, they resort to external sources of funding to support internal sources.
In spite of our awareness of the importance of external financing and the proceeds of the importance of capital as one of the main production through which an investment of economic resources factors available, because the capital available unevenly between the countries of the world, whether for cash capital or in kind so the flow of capital from the low-demand areas to high-demand represents a transfer of purchasing power of recipient countries allow her to this process in trade finance goods areas and services required.
Despite all that, but this funding carries with it the danger of a return Iraq to square zero, which began it before more than ten years of processors to the problem of indebtedness which cable by forced during the period following the second Gulf War, the fact that the external public debt is the cumulative total of foreign loans plus interest on those loans, to multiply out of Iraq's debts until it reached $ 39 billion is classified to four categories Paris Club debt and the debt of countries outside the Paris Club and the debt of the Gulf states and the debt of commercial creditors. Paris Club debt Iraq has managed during those years of walking strides in stages repay previous debts, leaving only a fraction of them after he has fulfilled its obligations to creditors as the total debt has been settled for countries outside the Paris Club exceeded $ 16 billion after it was up to 18.33 billion dollars in 2004 by offering to settle the debt creditors through a cash tender offer, in a way an offer to buy the debt of religion. The external borrowing in the current phase loads of immediate risk is higher than the increase of the potential of which benefits those inflationary pressures arising from the use of foreign funds, which will be on the most part to finance the Consumer expenditure heads as they are in the case of Iraq. It is also in the current situation of global oil prices and the nature of the rentier Iraqi economy, also carries a stop paying debt service risk as in the case of foreign loans and the resulting accumulation of debt signed by the country in the problem of the external debt crisis, which could feast Iraq to reschedule debts of negotiations New and in respect of the non-economic effects, whether political or social. such as those that result from the application of the economic adjustment policies which conditionality international institutions for the purpose of developing country access to the necessary funding to address the imbalance in the balance of those countries. the effects of foreign loans so in that sense it can not touch the effects Positive foreign loans at this stage and the opposite is true, because the increase in debt to finance public expenditures which acquires operating expenses and which of up to 82 percent meant a reduction of the forces of the overall width through the decrease of the resources available through the annual in this way unfair debt service, which It could contribute to the expansion of economic activity and achieve growth rates of economic. In this case lost real opportunities for economic growth spearheaded the investment process as the increase in operating expenses in a position such as the current situation in Iraq makes the budget is unable to create dynamic economic growth, which requires a huge investment needed by the level of the country. And that in the case of Iraq's inability to pay its debts it It would send negative messages to foreign investment that call into question the fact that investors and international financial institutions, the financial reality of Iraq, and will lead to a weakening of Iraqi banks dealings with foreign counterparts. Iraqi academic
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