Iraqi Dinar 123 News:– Global decline in oil prices and its affects, threats on Iraqi economy on borrowing foreign cash to cover the federal budget deficit was a talk of the town since last couple of months. There are a lot of foreground complications among the foreign borrowing supporters and opponents. The main reason is higher interest rate of foreign borrowing and it is up to 11.5 percent which would not go above from 1.5 billion U.S dollars. It is apprehensive with the political and financial commitments and it would be more important than effect looked-for effect. It is identical to the investment funds decisions and there will not be any investment without financing. The financing should be internal or external or the combination of both.
The internal sources of financing have its own importance because it would provide more and sufficient savings for the country, and these kinds of high level of savings corresponding to the basic needs for economic development, but external source of funding is an alternative to motivate and support the internal sources. In fact, foreign funding brings a risk which is creating more problems for Iraq. Originally, foreign loans doesn’t reflect positive impact in a critical stage as Iraq is much dependant on its oil revenues and continuous decline in the global oil prices increasing troubles for Iraq. A heavy loss in the opportunities for the economic growth would be increased for this investment and it would also increase the expenses in the current situation. As a result, Iraq would not be able to produce a dynamic growth because it needs a heavy investment.