Finance Ministry bonds drive Iraq's budget deficit

Shafaq News/ Iraq’s budget deficit is driven by the Finance Ministry’s issuance of large-scale bonds, financial expert said on Tuesday.

Former Central Bank official Mahmoud Dagher told Shafaq News that the ministry seeks to issue bonds to secure liquidity for covering government expenditures. “Given the difficulty of marketing bonds to the public, interest rates have been raised, and banks are being used as intermediaries 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 the offered interest rates align closely with returns from other financial activities.

According to a letter from the Central Bank to financial institutions, Iraq’s Finance Ministry is seeking to issue national bonds worth 3 trillion dinars (approximately $2.3 billion), designated exclusively for local banks.

The bonds will be issued in two tranches: the first, valued at 500,000 dinars per bond, will have a two-year maturity with an annual interest rate of 8%; the second, valued at 1 million dinars per bond, will have a four-year maturity with a 10% annual interest rate.

The sale is scheduled to take place from March 20 to March 29.