Financial Bonds Launch: A Strategic Approach to Addressing Cash Deficits
On February 5, the Federal Ministry of Finance in Iraq announced the initiation of national bonds, marking their first edition open for public subscription. This issuance is valued at one trillion Iraqi dinars and is set to be available from February 10 to March 10, 2025.
Understanding Financial Bonds
Financial expert Mahmoud Dagher, former General Manager at the Central Bank of Iraq, emphasized the role of financial bonds in bolstering the government’s budgetary measures. He indicated that the issuance of these bonds serves as a mechanism to support the cash deficit, although this does not imply that a financial shortfall is a prerequisite for their launch. Instead, the primary goal is to provide financial instruments that stimulate the local financial market.
Dagher noted that the bonds proposed by the Ministry of Finance are instrumental in addressing temporary budget deficits, affirming that the Ministry guarantees any obligations arising from these bonds as government debt.
Previous Bond Offerings
In addition to the upcoming national bonds, the Ministry of Finance previously launched government bonds categorized under the name "Achievement" last year. These were made available for public subscription with varying terms and interest rates:
| Bond Category | Duration | Annual Interest Rate | Payment Frequency |
|---|---|---|---|
| 500 Al-Awarar | 2 years | 6.5% | Every six months |
| 1 Million | 4 years | 8.5% | Every six months |
This structured approach to bond offerings reflects a comprehensive strategy to manage public finances effectively, providing necessary liquidity while also fostering growth within the financial sector.
The current financial landscape necessitates these strategic tools, as they serve both as a financial lifeline for the government and as an incentive for market participation.
