Public Debt Challenges

 Public Debt Challenges

 
Economic 06/23/2025  Yasser Al-Mutawali Public debt, in all its forms and varieties, whether external or domestic, is one of the most complex challenges facing countries,  especially developing countries and even those poised for growth.
 
One of the most prominent policies of   international capitalist institutions and banks is to  drown countries in foreign debt with the aim of  dominating and controlling them and  containing their economies (economic colonialism) or (economic monopoly), call it what you will, including some multilateral financial institutions,  by imposing on borrowing countries firm reforms that appear to improve the economic situation but in reality make their economies completely subservient to the wills and policies of the countries.
 
Perhaps the public (external) debt is a double-edged sword  for those who do not invest it well in   developing economic sectors and  achieving development that leads to stability.
 
If the public debt is for consumer spending purposes, then this is where the ultimate disaster occurs.
 
This policy pursued by international institutions has created a sense of international frustration,
particularly with the use of debt as a weapon against countries and the imposition of binding sanctions.
 
Therefore, you find that most countries, especially the superpowers, are at the forefront of those seeking an alternative to the dollar as a unit of measurement for  trade transactions,  debts, stocks, and  bonds.
 
I was once struck by a statement made by someone, from an economic analysis perspective, that the 
incurrence of domestic debt has no impact on the financial situation, which is truly surprising.
 
Public (domestic) debt is sometimes worse than external public debt,  especially if it is used outside budget allocations or purposes, such as  political purposes or for  liquidity purposes to cover excessive operating expenses, etc.
 
This debt often relies on foreign exchange reserves, which erode them. 
This poses a risk of accelerating financial crises. 
 
Domestic public debt increases the budget deficit,  which in turn impacts  inflation rates,  rising prices, and a  lack of liquidity.
 
This highlights the eternal contradiction and overlap between monetary and fiscal policies.
 
While monetary policy seeks to reduce annual inflation growth rates and increase foreign exchange reserves, fiscal policy implements government policies that contribute to government spending,
which sometimes intersects with the goal of monetary stability.
 
This imbalance in our experience in Iraq may be due to the absence of sovereign funds that would     balance these two policies and  achieve their developmental and financial stability objectives.
 
Therefore, the monetary authority needs efficient management to     achieve financial and monetary stability and thus   economic stability on an ongoing basis.     https://alsabaah.iq/116419-.html