Finance Ministry bonds drive Iraq's budget deficit
Shafaq News/ Iraq’s budget deficit is driven by the FinanceMinistry’s issuance of large-scale bonds, financial expert said on Tuesday.
Former Central Bank official Mahmoud Dagher told Shafaq Newsthat the ministry seeks to issue bonds to secure liquidity for coveringgovernment expenditures. “Given the difficulty of marketing bonds to thepublic, interest rates have been raised, and banks are being used asintermediaries this time, as they have liquidity and prefer risk-free,high-yield government securities,” he explained.
He predicted that this strategy would attract banks, as theoffered interest rates align closely with returns from other financialactivities.
According to a letter from the Central Bank to financialinstitutions, Iraq’s Finance Ministry is seeking to issue national bonds worth3 trillion dinars (approximately $2.3 billion), designated exclusively forlocal banks.
The bonds will be issued in two tranches: the first, valuedat 500,000 dinars per bond, will have a two-year maturity with an annualinterest rate of 8%; the second, valued at 1 million dinars per bond, will havea four-year maturity with a 10% annual interest rate.
The sale is scheduled to take place from March 20 to March29.
