By John Lee.
Fitch Ratings has affirmed Trade Bank of Iraq’s (TBI) Long-Term Issuer Default Rating (IDR) at ‘B-‘ with Negative Outlook. A full list of rating actions is below.
The Negative Outlook mirrors that on the sovereign. This reflects the impact of oil price slump on Iraq’s fiscal and external finances, near-term uncertainty over the sovereign’s financing plan and limitations on policymakers’ ability to respond to the fiscal crisis.
The Iraqi economy is undiversified and highly dependent on oil, which accounts for 50% of its GDP and close to 90% of fiscal revenues. Fitch forecasts the budget deficit to widen to 19% of GDP in 2020 and government debt/GDP to increase to an average of 80% in 2020-2021 from 47% in 2019.
Larger budget deficits will severely constrain government capital spending and banks’ credit growth. Fitch expects real GDP to shrink 9% in 2020.
Source: Iraq News