Mudhar Muhammad Saleh, Financial Advisor to the Iraqi Prime Minister, stated that while domestic debt has surpassed 100 trillion dinars, the country's primary challenge remains containing budget deficits and diversifying revenues away from oil.

Saleh told the state-owned ⁠Iraqi News Agency that Iraq’s debt is mostly internal due to a recent decline in external obligations, but because the country relies heavily on oil, its public finances remain highly vulnerable to global price fluctuations.

"Any drop in oil prices raises the debt-to-revenue ratio and increases pressure on the general budget, even if the public debt does not see a major increase," he noted. 

Saleh emphasized that exceeding a 40% debt-to-revenue ratio requires contextual analysis alongside indicators like the GDP ratio, rather than being viewed in isolation.

According to him, global organizations evaluate overall economic health by looking at debt-to-GDP, service costs, and revenue generation capacity.

Iraq's Public Debt Stands at Manageable 36% of GDP 

The advisor clarified that Iraq’s external debt due by 2028 does not exceed $9 billion. Combined with domestic obligations, the country's total public debt stands at a manageable 36% of its GDP. "This percentage is still within manageable limits according to global standards, which speak of a ratio exceeding 60%."

He highlighted that this percentage could drop further upon settling outstanding 2004 Paris Club agreement debts, adding that resolving these unresolved obligations with eight nations, including Gulf states, is expected to cancel at least 80% of the total amount. 

Iraq’s Domestic Debt Surpasses 100 Trillion Dinars 

Regarding domestic debt, Saleh stated that it has surpassed 100 trillion dinars, approximately $80 billion USD if calculated in foreign currency, constituting the “largest portion” of Iraq's total public debt.

"The impact of internal debt on Iraq's financial independence remains limited as long as the external debt is within manageable levels, especially since the external obligations due until 2024 remain relatively limited," he remarked.

Iraq Aims to Boost Non-Oil Revenue to 45% to Protect Budget 

The advisor warned that Iraq's continued deficit and reliance on borrowing leave its budget vulnerable to oil price drops, and may reduce the flexibility of fiscal policy, echoing the International Monetary Fund's view that the nation's true challenge is controlling this deficit and finding new sources of revenue. 

He stated that the current economic strategy aims to increase non-oil revenue from less than 10% to roughly 45% over the next decade