The Zaidi government is knocking on the doors of international dependency and ignoring sovereign alternatives.
The Al – Zaidi government is facing a barrage of political and economic criticism following leaked information about its formal request for a loan from the International Monetary Fund (IMF). Observers have described this move as “economic suicide,” the price of which will be paid directly by ordinary citizens.
While the government seeks quick solutions to address the upcoming budget deficit, financial experts believe that turning to international institutions is a misguided and ill-conceived choice, especially given the existence of substantial local and sovereign alternatives that could provide a genuine way out of the crisis without resorting to the IMF’s stringent conditions.
The real danger of this approach lies in the “ready-made prescriptions” imposed by the IMF, which invariably target the pockets of low-income citizens by lifting subsidies on basic goods, imposing progressive taxes, and reducing government employment—measures that are guaranteed to exacerbate poverty and unemployment rates in the country.
Economic circles confirmed to Al-Maalomah that resorting to external borrowing reflects a clear planning deficiency, while alternative and readily available rescue solutions exist. These include activating tax collection and customs duties, recovering looted funds, reducing unnecessary expenditures, and revitalizing the stalled investment sector, which could provide the upcoming budget with the necessary liquidity to prevent Iraq from falling into the trap of permanent economic dependency.
In this context, economic expert Saleh al-Khafaji outlined the potential negative effects of borrowing from the International Monetary Fund (IMF) on the Iraqi economy. He called on the government to be transparent with the public regarding the existence of any borrowing efforts, the amount of funds required, and the economic repercussions.
Al-Khafaji explained to Al-Maalomah that “the IMF revealed the Iraqi government’s efforts to borrow, which contradicts what Prime Minister Ali al-Zubaidi announced a few days ago regarding his government’s intention not to borrow and burden the treasury with further debt.”
He pointed out that “borrowing from the International Monetary Fund (IMF) could have negative repercussions due to the interest rates, conditions, and binding decisions that could directly affect government spending,” noting that such loans could increase the size of external debt and exacerbate the financial burdens on the general budget.
Al-Khafaji stressed the need for clear government transparency with the public regarding the existence of any efforts to borrow from the IMF, the amount of funds that might be borrowed, and an explanation of its impact on the Iraqi economy.
The economist questioned the wisdom of raising the dollar exchange rate if there were indeed efforts to borrow from the IMF, warning that the accumulation of external debt could impose additional burdens on the Iraqi budget and economy.
For his part, economist Ziad al-Hashemi criticized the Iraqi government’s move towards borrowing from the IMF, considering that this step raises questions about the justifications for devaluing the Iraqi dinar, which was presented as a measure to avoid resorting to more painful financial options, including external borrowing.
Al-Hashemi said in a post on his Facebook page that the negotiations with the International Monetary Fund to obtain financial support reveal, in his opinion, a contradiction in the government’s position, especially after justifying the change in the exchange rate by saying that it aims to avoid external borrowing.
He added that resorting to IMF loans might be linked to conditions related to managing public spending and maximizing revenues, as well as the possibility of reviewing government subsidy policies, particularly in the fuel and electricity sectors and other high-spending sectors.
Al-Hashemi pointed out that “the government should have clarified to citizens the nature of its approach to external borrowing and the reasons that prompted it to take this step, despite the change in the dinar’s exchange rate just a few weeks ago.”
He warned that “borrowing could impose additional burdens on Iraqi fiscal policy,” noting that the recommendations associated with IMF programs could, if a financing agreement is reached, become obligations tied to the loan’s conditions and implementation mechanisms.
Almaalomah.me