Tracing Iraq’s transformation from the most indebted country in the world in 2003 – Axios

Category: Iraq

When the U.S. invaded Iraq in 2003, it was taking control of the most indebted nation in the world.

Why it matters: Iraq's debt at the time was an astonishing $130 billion, and the eradication of that debt was a rare example of international unity and cooperation in the interests of a debtor country.

The big picture: Iraq had very few debts before the Iran-Iraq war of 19801988. Western countries armed Iraq during that war, and accepted IOUs for their weapons despite knowing that Iraq was already insolvent.

After the war, the UN took the extraordinary step of immunizing all of Iraq's assets from attachment by creditors. That put Iraq in an extremely strong negotiating position, and ultimately the country managed to persuade creditors to accept a reduction of 80% in the value of their debts.

Where it stands: Iraq today may be facing political turmoil, but its sovereign finances are in good shape, with a low debt-to-GDP ratio, substantial foreign reserves, and a healthy fiscal surplus.

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Tracing Iraq's transformation from the most indebted country in the world in 2003 - Axios

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January 7th, 2020
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