Iraqi Dinar Discussion Board

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Iraq's Debts Deepened Imbalances in the National Economy

A debt incurred by Iraq as a result of the wrong policies of the former regime burdensome and fateful challenge on the prospects for the development of the country because it contributed to the deepening of imbalances in the Iraqi economy.


Perhaps one of the most prominent effects of this size and other debts accumulated interest and growth in the volume of debt service, which was rescheduled in accordance with the terms and instructions international financing institutions (recipe ready), which changed the course of the solutions and remedies needed to reverse what it meant, in this economic curve talked economic researcher Hilal told Ta `( Sabah), said: After long years to move in this direction found himself in the former regime's confused and become unable to repay foreign debt, or even the total internal debt together these astronomical figures and after the events of 9 / 4 / 2003 and the inability to pay debts In response to the pressure of the international institutions in order to restore Iraq (rescheduling its debts), in accordance with the terms of the Paris Club.

Helal added: effects of this trend questions about the need to resort to such actions and the reasons that prompted Iraq to borrowing, and these astronomical figures, some internal such in the state budget, and the impact of inflation in the value of the Iraqi dinar, economic stagnation and the local and global burden of suffocating debt, which is which was reflected in the growth rates in Iraq, reaching in some years to zero and threatened to vital sectors such as food, which occurred a gap of $ 10 billion dollars.

Hilal pointed to a large decline in the levels of income, which amounted to $ 3600 per person in the eighties decreased to approximately $ 600 per year only, and after the events of 9 / 4 / 2003 to become the Iraqi per capita income is not enough to fill the basic needs of food, housing, health services, education and transportation, electricity , and the unemployment rate rose to be reached (30 percent - 40 percent) of the total labour force in Iraq, but the question is whether these structural imbalances in the economy cause of Iraqi debts, or a result?

Ta `explained in the answer to this question whether these structural imbalances in the economy cause of the Iraqi debts or result, Iraq found itself compelled to succumb to the conditions of financial institutions, both international donors, including the International Monetary fund and the World Bank who commit debtor nations through economic and social policies or certain institutions Arab financial subjugation that did not stop it and added to it their own, which is usually careful not to take political positions States borrowed inconsistent with the policies of creditor nations, as happened in Egypt, Jordan and Syria after the second Gulf War in 1991.

He noted that after the Ta `faltering Iraq to repay its debts premiums and benefits accumulated during the former regime impact on the political will, and raises questions about the most effective ways to get out of the debt crisis.

Is resort to rescheduling by the Paris Club and respond to the conditions and responded by the terms of international and Arab financing institutions to rescheduling its debts and dishes breath and trying conditions of the new arrangement, or solution might be to work to create a stable legislative and infrastructure support and improve financial policies and to find healthy climate for investment capital encourages Iraqi immigrant repatriation return bold.

He stressed the need Ta `exploring the horizons of the future and thinking about getting rid of the debt problem and its political and economic, has been Iraq's foreign debt trap event of a number of Arab countries and developing countries, hitting critical levels affected the economic situation and social and political structure of Iraq.

He spoke about the implications of Ta `external indebtedness on the development plans, saying:Perhaps it is ironic that at a time when oil revenues were formed in Iraq in large quantities unprecedented (high crude oil prices in the seventies and beyond, or what is called the surge of oil).

The same period witnessed growth in the volume of external debt Iraqi rates unprecedented because of the Iraq-Iran war, the Gulf War and the economic blockade.

He added Ta `Due to the increased volume of the debt that accompanied the rise in the volume of service payments (Iraq's debt) and became eat up a large part of the proceeds with the goods, services and the form of this restriction, or are a heavy burden on future development plans because of swallowing an important aspect of foreign exchange in the service of the foreign debt.

And the diagnosis of the effects of foreign debt on development plans Ta `explained that through the analysis of the effects of debt on the domestic savings and import capacity and inflation became clear that the relationship between foreign capital and domestic savings produced paintings are:Integration of domestic and foreign resources and supporters of this thesis considers that the foreign capital if exploited economically exploited well lead to increased GNP and high levels of income and therefore higher savings rates as a result fill the shortage of financial resources necessary to finance investment projects.

He continued Hilal: finds supporters of the Second Treatise that these funds are not exploited optimal exploitation and often tends towards financing consumption, especially of imported goods, and a small percentage tends to invest in projects go down repercussions which reduces the chances of creating a new financial surpluses and raising efficiency of the economy and its growth, which adversely affects potential domestic savings.

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