The Impact Of The Budget Deficit On The Repayment Of Iraq Internal Debt For Period 2004-2019

Abstract

The research examines general budget (GB) deficit and its impact on Iraq's internal debt(ID) repayment(DR) for some time. (2004-2019), deficit is financed by issuing bonds , treasury transfers and selling them in primary market. The banking system often acquires the largest proportion of these bonds, with contribution of bank debt in 2019 reaching 71% of total domestic debt. Borrowing amounts often went consumer spending without investing in productive sector or rehabilitating infrastructure to create suitable ground for improving the realities of productive sectors such as industry and agriculture in country's financial surpluses ", noting that during most of years of consideration General Budget enjoyed financial surpluses but the default was the best option for Financial Authority owing to its dominance of the monetary authority and the lack of clear Government programmers (GP)for successive budgets, The analytical method of data , standard analysis, Results of which showed a weak correlation between the budget deficit , non-payment of internal debt, due to, was used, with greatest impact being the dominance of financial authority's failure to pay during majority of surplus years.

Based on foregoing, the study's findings recommend a policy of fiscal control , rationalization of public expenditure by reducing some paragraphs of unnecessary expenditure, sustaining domestic debt, diversifying sources of domestic debt financing from non-banking institutions and contributing to the public to a greater proportion of domestic savings.