PROJECTS: Iraq likely to issue bonds to finance budget deficit- official

Previous bond issue was in 2017

  
Image used for illustrative purpose. Iraqi banker counts 10,000 Iraqi Dinar bills to change into 250 Iraqi Dinar bills in Najaf, Iraq April 28, 2003.

Image used for illustrative purpose. Iraqi banker counts 10,000 Iraqi Dinar bills to change into 250 Iraqi Dinar bills in Najaf, Iraq April 28, 2003.

REUTERS/RubenSprich REUTERSRS/FMS

Iraq's draft budget for 2021 has provided for issuing bonds in the domestic or international markets to fund the budget deficit after the Iraqi parliament ratifies the budget, a government official said.

The Iraqi government's financial advisor Mudher Muhammed Saleh told Zawya Projects that the draft budget has allowed flexibility in terms of types of bonds that can be issued.

Earlier this month, Emirates NBD Research said that a planned budget expansion to 150 trillion Iraqi dinars and government-projected deficit of 65 trillion Iraqi dinars would mean a fiscal shortfall equivalent to 21.9 percent of GDP in 2021.

In November 2020, the Trade Bank of Iraq (TBI) said in a statement that the prospect of offering national bonds in Iraqi Dinar and US dollar currencies with different lengths of time to provide options to investors was discussed with the Private Banks Association of Iraq.

Saleh said Iraq had issued $2 billion worth of bonds in 2017 in two tranches in the international markets to help narrow its budget deficit. In 2006, Iraq had issued $2.7 billion of international bonds with a coupon of 5.8 percent and repayment period from 2020 to 2028. These were issued as part of Paris Club restructuring agreement to settle Iraq's foreign, sovereign and commercial debt dating from Saddam Hussein's time with a discount of no less than 80 percent.

(Reporting by Majda Muhsen; Editing by Anoop Menon)

(anoop.menon@refinitiv.com)

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