Skip to content Skip to Search
Skip navigation

Moody’s opts to keep Iraq on lowly sovereign rating

Workers at an oil refinery in Kerbala, central Iraq. Rising oil prices have helped the country to pay down debt Reuters/Alaa Al-Marjani
Workers at an oil refinery in Kerbala, central Iraq. Rising oil prices have helped the country to pay down debt
  • Agency maintains Caa1 rating, citing corruption and weak institutions
  • Decision comes despite oil prices boosting foreign exchange reserves
  • Two-thirds of government’s spending is public sector pay and pensions

An influential ratings agency has decided to keep Iraq on one of its lowest sovereign ratings, despite the country’s strong oil exports and recovering foreign exchange reserves.

Moody’s Investor Services said in an annual review released last week that corruption and weak institutions prompted it to maintain Iraq on a Caa1 rating, which is on a par with Nigeria and Bolivia.

The agency assigned the sub-investment grade rating despite higher oil prices allowing Iraq’s central bank to bolster foreign exchange reserves and pay down debt owed to Kuwait and providers of electricity including Iranian entities.

Ratings from Moody’s and its competitors are watched closely by international investors to determine capital allocations.

Moody’s said the $89 billion in Iraqi central bank foreign-exchange reserves at the end of 2022 was higher than the overall stock of external government debt of $68.5 billion as of the end of 2021. 

But any Iraqi government has little room to move fiscally. Two-thirds of current spending is made up of public sector wages and pensions, according to the agency.

Moody’s said much of its analysis was underpinned by the country’s precarious politics and described corruption as an enduring problem.

An internal audit in November 2022 found that $2.5 billion had been embezzled from Iraq’s General Commission for Taxes during 2021-22, the agency pointed out.

Two decades on from the US-led invasion and nearly six years after the defeat of the Islamic State insurgency, more than a fifth of Iraq’s population still lives in poverty.

Separately, Ericsson, the Swedish telecoms giant with operations in Baghdad, has been forced to distance itself from Quran-burning in its home country after Mohammed Shia Al Sudani, Iraq’s prime minister, ordered the withdrawal of his chargé d’affaires from Stockholm.

On Thursday night hundreds of demonstrators stormed the Swedish embassy in Baghdad in response to an incident in Stockholm. 

Anti-Islam protesters and Kurdish activists, some of whom are opposed to the governments in Iraq and Turkey, have organised a number of Quran burnings in Sweden in recent months.

However, it is not known whether the Muslim holy book was actually burnt on Thursday.

Ericsson has around 30 employees in Baghdad involved in selling mobile network infrastructure and providing technical support and maintenance to local operators. 

The company said in a statement on Friday that Quran burning “does not reflect Ericsson’s core value of respect”.

Al Sudani, who became prime minister last October, also told the Swedish ambassador in Baghdad to leave Iraqi territory. 

Earlier this month, Al Sudani signed a much-delayed but critical $27 billion deal with TotalEnergies of France. It includes a long-awaited seawater purification project needed to raise pressure in Iraq’s prolific but ageing super-giant oilfields, as well as a 1GW solar power plant and a gas processing facility.

Saudi Arabia’s Acwa Power has also pledged to help build a large solar facility near Najaf in the south of Iraq while Aramco, the Saudi state-owned oil major, has said that it is looking at developing a neglected gasfield in Iraq’s Anbar province.

Latest articles

Saudi arabia water

$4bn set aside for Saudi water projects

Saudi Arabia will spend $4 billion by the end of the decade on recycling over 2 billion cubic metres of water, about 70 percent of the country’s renewable water sources, an official said this week.  Speaking at the World Water Forum in Indonesia, Mohammed bin Zaid Abuhid, head of the General Authority for Irrigation, outlined […]

Cigarette sellers in Aswan, Egypt. US company Philip Morris says it wants to give smokers in Egypt 'better options than cigarettes'

US cigarette giant buys slice of Egyptian rival

The American tobacco giant Philip Morris International (PMI) has acquired a minority stake in Egypt’s largest cigarette manufacturer. PMI, which owns brands such as Marlboro, L&M, Merit and Parliament and is the world’s top tobacco company by market value, has bought 14.7 percent of Egypt’s Eastern Company, which also includes cigars and pipe tobacco in […]

Visitors admire the House of the Blackheads in Riga, which Eagle Properties hope will be 'the new centre of Europe'

Abu Dhabi developer spots opportunity in Latvia

Abu Dhabi developer Eagle Hills Properties announced a €3 billion ($3.25 billion) investment in the Latvian capital city of Riga, as the UAE continues its investment drive into Europe. Eagle Hills’ Riga Waterfront, which was unveiled on Thursday, will ultimately encompass 8,000 luxury homes for 30,000 residents on a redeveloped site along 5 kilometres at […]

Passengers at Muscat International Airport. Oman plans for it to be joined by six more locations

Oman plans 6 new airports in tourism push

The majority of Oman’s six new airports are expected to be operational by 2028 and 2029, as part of the government’s initiative to promote tourism, a senior government official has said. Work is under way on designing the new projects, which will increase the number of airports to 13, Naif Al Abri, chairman of the Civil […]