To Finance the Deficit: Government Turns to Borrowing Options from Central Bank Reserves

High-level economic sources have revealed a serious governmental inclination towards internal borrowing to cover the fiscal deficit resulting from revenue shortfalls. According to statements from the Prime Minister's Advisor, the plan involves borrowing substantial amounts from official financial institutions. The Central Bank of Iraq will cover approximately 45% of this internal debt, thanks to its robust reserves, while the other half will be financed through major state banks such as Rafidain, Rasheed, and the Trade Bank of Iraq (TBI). These statistics indicate a genuine desire to avoid external debts with compound interests and the conditionalities of international lenders. However, withdrawing this massive liquidity from the internal banking sector requires highly meticulous monetary management to ensure it does not impact inflation levels and guarantees the continued availability of accessible financing for private sector projects and small businesses in the country.