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Damage from external loans
Articles 02-4-2024, 08:03
Bashir Khazal
The continuation of the mechanism of external borrowing from banks and international agencies for development purposes may appear, in its general context, as normal borrowing,
especially those in which a very easy and reduced interest rate is agreed upon,
but what the government must pay attention to is caution against agreements with conditions imposed by donors or lenders.
Because it may cause the country’s economic policy to be drawn up in a systematic manner in the long term, and restrict the economy in a way that is not proportionate to maintaining independence in the decisions of major strategic projects, or monopolizing one party over another.
The government usually borrows development loans from international agencies, some of which are old, such as the Madrid Agency.
For reconstruction, the Japanese Agency, the British Agency, the American Development Agency, the World Bank, and the International Monetary Fund, all of which are natural borrowings, which many countries resort to in order to implement projects that cannot be postponed, and as interest and installments,
Iraq pays approximately ten trillion Iraqi dinars, which is equivalent to 7 billion dollars, which is A percentage that constitutes 12.5% of the gross domestic product, and
it may appear in the eyes of specialists that this percentage constitutes a reduced amount of debt, and indicates the recovery of the Iraqi economy,
but the danger lies in the continuation of these loans and the rise in the interest rate with the change in the security situation in the region, Article 25 of the Constitution.
It stipulates that (the state shall guarantee the reform of the Iraqi economy according to modern economic foundations), and
the government is supposed to implement this text by relying on the state’s internal resources.
Any external loan entails interest over time,
and it may sometimes be on conditions that harm the country’s sovereignty, and
there are economic and sovereign risks to Iraq as a result
The use of external borrowing policy in light of a huge budget estimated at 198 trillion Iraqi dinars, in addition to the presence of articles in the 2023 budget that included paragraphs that depend on external borrowing and from several countries to cover projects that are described as strategic.
The extent of the risk of these loans in the long term is not small, and may gradually cripple the Iraqi economy. With inevitable connections for many years,
we have experiences of countries that suffered from borrowing measures from abroad, such as Greece, in which the debt ratio increased compared to the domestic product, which caused a major financial crisis, and
after a while, Greece was lent again under severe austerity conditions, until the public debt crisis increased by 175 percent. % in the year 2015, and the rest of the story of the Greek crisis is known to everyone, as well as
Brazil, which borrowed from the International Monetary Fund, and became unable to repay the debt, and the cumulative interest began to exhaust its wealth and resources to repay the loans.
There are investment opportunities, natural resources, and enormous wealth that Iraq has that spare it any need.
We are in need of loans from abroad, and
it is not necessarily the urgency that calls for us to shackle the Iraqi economy with unnecessary financial loans.
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Articles 02-4-2024, 08:03
Bashir Khazal
The continuation of the mechanism of external borrowing from banks and international agencies for development purposes may appear, in its general context, as normal borrowing,
especially those in which a very easy and reduced interest rate is agreed upon,
but what the government must pay attention to is caution against agreements with conditions imposed by donors or lenders.
Because it may cause the country’s economic policy to be drawn up in a systematic manner in the long term, and restrict the economy in a way that is not proportionate to maintaining independence in the decisions of major strategic projects, or monopolizing one party over another.
The government usually borrows development loans from international agencies, some of which are old, such as the Madrid Agency.
For reconstruction, the Japanese Agency, the British Agency, the American Development Agency, the World Bank, and the International Monetary Fund, all of which are natural borrowings, which many countries resort to in order to implement projects that cannot be postponed, and as interest and installments,
Iraq pays approximately ten trillion Iraqi dinars, which is equivalent to 7 billion dollars, which is A percentage that constitutes 12.5% of the gross domestic product, and
it may appear in the eyes of specialists that this percentage constitutes a reduced amount of debt, and indicates the recovery of the Iraqi economy,
but the danger lies in the continuation of these loans and the rise in the interest rate with the change in the security situation in the region, Article 25 of the Constitution.
It stipulates that (the state shall guarantee the reform of the Iraqi economy according to modern economic foundations), and
the government is supposed to implement this text by relying on the state’s internal resources.
Any external loan entails interest over time,
and it may sometimes be on conditions that harm the country’s sovereignty, and
there are economic and sovereign risks to Iraq as a result
The use of external borrowing policy in light of a huge budget estimated at 198 trillion Iraqi dinars, in addition to the presence of articles in the 2023 budget that included paragraphs that depend on external borrowing and from several countries to cover projects that are described as strategic.
The extent of the risk of these loans in the long term is not small, and may gradually cripple the Iraqi economy. With inevitable connections for many years,
we have experiences of countries that suffered from borrowing measures from abroad, such as Greece, in which the debt ratio increased compared to the domestic product, which caused a major financial crisis, and
after a while, Greece was lent again under severe austerity conditions, until the public debt crisis increased by 175 percent. % in the year 2015, and the rest of the story of the Greek crisis is known to everyone, as well as
Brazil, which borrowed from the International Monetary Fund, and became unable to repay the debt, and the cumulative interest began to exhaust its wealth and resources to repay the loans.
There are investment opportunities, natural resources, and enormous wealth that Iraq has that spare it any need.
We are in need of loans from abroad, and
it is not necessarily the urgency that calls for us to shackle the Iraqi economy with unnecessary financial loans.
[You must be registered and logged in to see this link.]
