aav; improvedand increased iu mess iolo reschedule mcst afIraq'sdeb: -ill continue lolieyears as Baghdad seers civilian andmost debt repayment as aIraq will not reduce iu debttitty, probably no: beforepoor debt managementto further restrictto Iraq, forcing cud ingreater popularHuiaynV
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Baghdad's - ersive use of foreign loans2 has trHlfc ned Iraq from one of the Third World's richesties to one of its largest debtors. The aocuraala:.c.f debt stems from Bagadadicitioo io continue pursuing an ambitious economic develcp-rnen: program despite trie wir with Iran. Civilian spending remained high wbile military eapenditures increased and oil exports fell sharply xcausc ot* Iranian-inflicted damage to oil fact..iicj
In ieapor.sebe worsening financial picture.adopted domestic austerity measures and began borrowing frora trading partners and iu Culf Arab alliesraq's foreign debt rose from SS-6short-term trade:he war loillion atS. In addition. Iraq's Persian Coif allies pro-idedillion in financialsold on Baghdad'snd
Iraq'i inability to meet its financial obligations to creditors during tbe war led it to reschcdcle most of its debt, including short-term tradendpayments.ebt payments combined with low world oil pricesinancial crisis in Iraqag bead signed bilateral rescheduling accords with most of its creditors and ignored most other requests for payment. Iraq's poor payment record caused govemmcnts that bad not already cut c5 crtSi: iiacso so. forcing Iraq to scramble lo pay for essential imporui
More Payments Bring More Credits
Higher oil revenues allowed Iraq to improve iu debt servicing record somewhataghdad's oil earnings of roughlyillion last year were aboutercent higher than6 "ben its financial wccirisis point. Even so. Iraq is paying moil of its creditorsortion of what they arejustcontinues ioihef iu debt. Last year. Iraq rescheduledillion in debt duend is seeking to reschedule several billion dollars gasjaaa,
Baghdad gives repayment priority lo creditor* who provide more loans or supply goods and services vital to iu economy. Ln contrast, some creditors, such si Japan, arc receiving no paymcau at all. Baghdad has sought io repay iu debt with oil whenever possible aad negotiated such deals with Yugoslavia. India, and Turkey last year. The soli oil market, however, has
discouraged most crodiuxi from agreeing to barter
. - aawaV
e doubt Baghdad will
repay this deb; regardless of whether .the Saudis and Kuwaitis formally cancel iu
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