S&P Global Ratings affirmed at 'B-/B' Iraq's long- and short-term foreign and local currency sovereign credit ratings, with a 'stable' outlook. It noted that the ratings are constrained by the country's nascent political institutions, domestic political tensions, ongoing security risks, low GDP per capita and weak economic activity. However, it said that the ratings are supported by the concentration of the majority of Iraq's oil fields in areas under the control of the federal government. S&P considered that the recently announced 2019 budget reflects the unpredictability of Iraq's policymaking, as it incorporates several concessions to limit the risk of public discontent and to address substantial reconstruction needs, which would result in an increase of 20% in public spending this year. As such, it expected the International Monetary Fund to suspend the disbursement of funds in the near future, due to the country's non-adherence to the IMF's arrangement. It projected the fiscal balance to shift from a surplus of 4% of GDP in 2018 to a deficit of 6% of GDP in 2019, based on its lower oil price assumption and in the absence of other official sources of funding. Also, it anticipated the public debt level to increase from 66.1% of GDP at the end of 2019 to 70.1% of GDP by end-2022. It noted that the government plans to finance its 2019 deficit through a mixture of short-term domestic financing, such as utilizing assets accumulated from the 2018 fiscal surplus, increasing the pension fund's holdings of government securities, as well as tapping official and bilateral funding sources. Further, it forecast the current account surplus to narrow from 12.8% of GDP in 2018 to 5.7% of GDP in 2019, on the back of lower oil export receipts. 
Source: S&P Global Ratings