Iraq thwarted plans to raise two billion dollars from the global debt markets this week to fill the budget caused by lower oil prices gap after the US Congress refused to guarantee half the value of the bonds.
Iraq had said it is seeking to issue bonds worth one billion US dollars guaranteed in full in order to reduce debt costs before other bonds issued one billion dollars as part of the 2017 budget, which enjoys the support of the International Monetary Fund.
These funds will complement the agreement with the International Monetary Fund for a loan worth $ 5.34 billion over three years, which the Fund has agreed in July in exchange for economic reforms. Baghdad hopes that the agreement opens the door to get more than $ 12 billion in additional aid from other sources such as the World Bank and the Group of Seven major industrial countries.
Western allies acknowledged the importance of the need to protect the fragile economy of one of the most important Organization of Petroleum Exporting Countries members (OPEC) from collapse, which could threaten to undermine the military gains made by the Iraqi forces and the international coalition led by the United States to organize Daesh. These forces seek to regain control of the city of Mosul, a stronghold for militants later this month.
US President Barack Obama’s administration requested that the guarantee granted under the “Extended Resolution” -oho temporary legislation allowing the US government to continue its work until the approval of the more permanent decisions regarding Balanvaq- but is not responding to this request in the final version passed by Congress on Wednesday.
Lawmakers said they sought to remove the side issues outside the spending bill to ensure into force before the start of the new fiscal year, which begins on Saturday.
He said the appearance in favor of a financial advisor to Iraqi Prime Minister Haider al-Abadi, which has had a close role in the issue of bonds and another source familiar with the matter told Reuters that Republicans in Congress caused the failure to grant security for the bonds, but did not mention further details.
And it has a Republican majority in both the House and Senate, but it was unclear if they have a specific objection to pump more money for Iraq, which has already received billions of dollars from Washington in the form of economic and humanitarian military aid since the invasion led by the United States in 2003.
And feel a lot of members of Congress frustrated by the Iraqi government. They fear that the United States sent a lot of money to Baghdad without achieving sufficient results due to corruption and inefficiency.
Is still possible grant of security to the Iraqi debt securities in the spending bill must be passed to allow the government the freedom to work after the ninth of December, the day on which the application expires temporary spending bill.
And it includes the latest draft of the proposed budget for Iraq for 2017 forecast of expenditure 90.224 trillion Iraqi dinars ($ 77.6 billion) and a deficit of about 12 trillion dinars.