Kurdish Bond Plan: Financial Folly?

Iraqi Kurdistan had experienced a couple of golden years as its economy grew – during 2013 foreign investors apparently contributed around 60 percent of all investment in local projects. That percentage has fallen hugely in 2014 but as yet there are no definitive numbers as to how big the decrease is.

“Despite political tensions and security problems, Iraqi Kurdistan has been able to maintain its economic and security status,” insists Dara Jalil Khayat, the head of the Kurdistan Federation of Chambers of Commerce and Industry. “The threat of terrorism and the cut-off of the Kurdish region’s share of the federal budget have challenged economic growth here though. And this has made the region contemplate new measures in order to keep the economy going,” he says.

For now the idea of borrowing money from international lenders remains a controversial subject in Iraqi Kurdistan. There are also plenty of unanswered questions. Such as: How much money needs to be borrowed? Where will it be spent – on growth-enhancing projects or to pay back debts? And what impact can corruption have on these loans?

Both those who support the idea of borrowing and those who oppose it are agreed on one thing: The Iraqi Kurdish government must be able to answer these questions before this plan can go any further.

(Bonds image via Shutterstock)