Fitch revises Iraq view to stable

Fitch Ratings said it revised Iraq’s outlook to stable from negative and affirmed its long-term foreign-currency issuer rating at B-.

“The outlook revision reflects a smaller-than-expected decline in foreign reserves and materially higher oil prices relative to Fitch's baseline in April 2020, when we assigned the negative outlook. Policymaking remains hamstrung by political-economy dynamics, although an 18.5% devaluation of the Iraqi dinar and government approval of a white paper on fiscal and economic reforms indicate some potential for measures to place Iraq's finances on a more sustainable footing,” Fitch said in a press release.

The agency said it sees Iraq’s budget deficit equal to about 5% of GDP in 2021, shrinking from a projected 16.5% of GDP in 2020 due to higher oil prices and the devaluation.

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