Let’s start with a little test: Can you rank the following economies in order of the expected risk of their defaulting on their sovereign debt – Ireland, Argentina, Dubai, Greece, Iraq?
The correct order, based on the cost using credit default swaps (CDS) to insure their debt against default, is: Greece (riskiest), Ireland, Argentina, Dubai, Iraq (10th riskiest). The full top-ten is: Greece, Venezuela, Ireland, Portugal, Argentina, Ukraine, Spain, Dubai, Hungary and Iraq.
The result probably won’t surprise regular readers of Iraq Business News, who are already aware of developments such as the increases already achieved in Iraq’s oil output, the impending third round of oil licences, and the contracts signed for the construction of new power plants.
Edinburgh-based consultants Wood Mackenzie estimate that, “in Iraq, upstream investment is likely to climb rapidly to $10 billion in the next three years.”
So while the public perception of Iraq is still one of high risk, and it is admittedly far from being a developed economy, the financial markets are already beginning to recognise Iraq’s improving outlook.