Iraq's government debt as a share of GDP is expected to drop significantly to pre-pandemic levels as high oil prices boost revenues, according to Fitch Ratings.

The sovereign's debt will be around 47 percent of GDP this year, compared to 66 percent in 2021. The debt/GDP ratio is the largest for any sovereign in the Middle East and North Africa region, bringing the country below the median for 'B' rated states.

"We expect debt/GDP to drop as higher oil prices... and production boost government revenue and nominal GDP," the ratings agency noted on Wednesday.

Oil prices are estimated to average at $105 per barrel this year and $85 per barrel in 2023.

However, while the fall in government debt is positive for Iraq's creditworthiness, the decline may not be sustainable.

"The decline may not be sustainable, as it partly reflects political tensions that have constrained public spending and reflect the high political risk captured in Iraq's 'B-' rating," Fitch said.

Last January, Fitch affirmed Iraq's long-term foreign currency issuer default rating at 'B-' with a stable outlook.

(Writing by Cleofe Maceda; editing by Seban Scaria)