Credit assessment of the Iraqi economy and institutions

1/10/2015 0:00

Mohammed Sharif Abu Mayssam
while the global financial crisis occurred in 2008, the questions hovering over the role of the three agencies concerned on the credit rating (Fitch, Moody's and S & P), a large and dominant 95 percent of the credit rating industry in the world's agencies, and the big question regarding assessment on debt instruments of the banks that caused the financial disaster that characterized Bamoalat in Altvaaol by these agencies, and not realizing the consequences of falling property prices and then the collapse of the debt instruments and mortgages that were worth billions of dollars, which caused the collapse of the real estate market and the bombing of the crisis are not expecting one. . as she was the surprise global investment institutions that their investments no longer have to remember after that rating agencies announced hindsight it value realized its mistake in a late ..oalentijh that investment institutions the same and after that lost the value of their investments has faced in turn, a reduction in credit assessments as a result of the sharp deterioration in the values ​​of their portfolios and then hit the financial markets to a standstill after investors of these debt instruments and institutions that are Lakeazadtha fled.

Consequently acknowledged a lot of economists Americans multiple errors which these agencies have signed including the lack of accuracy and sufficiency old and vague statements in the preparation of assessments , but that these experts were not content with throwing the blame on the agency, but drew the error in which the markets occurred when totally relied on the rating agencies ratings, some confirmed them «Investor forgot to him to evaluate investment rather than merely the opinion of actors evaluation may lack the precision or neutrality supposed »and put here set lines under the so-called« a lack of precision and the lack of neutrality «we read the report of the agency« Moody »last on the Iraqi economy, which is going through a financial hardship as a result of lower oil prices and the war on terrorism ..

While announces the Iraqi Oil Ministry The oil export rates exceeded the barrier of 3 million barrels a day by about 400 000 barrels, we find that the IAEA report speaks for rates ranging in the range of 3.1 million barrels, While confirming the national strategy for energy launched by the advisers in the year 2013 that, that oil production will reach about 6 million barrels in the year Solutions in 2017 the agency points out in its report as if praising Iraq sought which will increase its oil production by 10% annually to reach about 5 million barrels a day by 2019 ..

The highlights in conjunction with the non-oil growth from 2016 recovery onwards with what it calls the escalation of oil production, pointing out that «this will help to raise real GDP growth rate to about 8% a year between 2016 and 2019» !!.

That as pointed out by the agency in its report does not seem accurate according to data announced by the Iraqi authorities, nor in line with the minimum expectations of plans and programs announced by the relevant authorities and are working on cooperation with international investment companies in the oil sector, and if the decline in oil prices and the war on terror two reasons direct to disrupt a lot of energy, projects and lower growth rates, this does not means a lower capacity in the oil sector in safe areas, and will not be an excuse to fall back on plans that work is carried out currently in accordance with the national strategy for energy, not to mention that the report came loaded with a lot of information is not accurate, including that the public sector is dominated by the non-oil sector, while falling about 90 percent of the agricultural sector, small and medium enterprises under private sector management ..

Elsewhere report noted that oil production continues to grow by about 4.5%, while the Oil Ministry data indicate that much more, the report did not mention the growth rates in the oil industry after the signing of contracts for the construction of new refineries and storage tanks oil giant and large network of oil pipelines and contracts for elementary for the construction of large projects for the petrochemical, which means that the report's authors relied on outdated or inaccurate statements do not fit at all with the requirements of the oil industry in Iraq at a time in which he referred to realistic rates As experienced by Iraq on the unilateral economy and failure to diversify revenue and lower real GDP Iraq by 2.1%, driven by a sharp contraction in the non-oil growth.

In spite of the lack of capacity and author of the report to explore the sale of oil rates in 2016, however, he preached a deficit will be of about 15% of GDP, adding that would finance this deficit to raise the government's debt ratio to about 79% of GDP by the end of 2016 ..

What raises the question about the standards adopted by Moody through which our skin, which at this level of the deficit in the gross domestic product?

but we are the reality of these facts foresee that Iraq's credit rating, which has not yet been determined, may be threatened with further decline from the level B, which some had predicted optimistic, based on the severity of the appetite for Iraqi bonds in global markets, which amounted to 2.7 billion dinars at a fixed annual interest rate of 5.8 percent.