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By Stanley Carvalho
ABU DHABI, Nov 26 (Reuters) - Iraq is planning a $2 billion sovereign bond issue in 2018, the central bank governor said on Sunday, after the country successfully returned to the international debt market by selling a $1 billion bond in August.
“The economy is seeing a recovery with the increase in oil prices and measures of the government on financial consolidation,” Ali Ismail al-Alak told Reuters after the opening of Trade Bank of Iraq’s representative office in Abu Dhabi.
On the sovereign bond, he said: “It is in process, awaiting parliament approval. It is to cover the budget deficit.”
Iraq’s budget deficit, according to a draft budget, is running at around 18 trillion to 19 trillion Iraqi dinars ($15.4 billion to 16.3 billion), he added.
The country’s $1 billion bond sale in August was its first international debt issuance as a stand-alone credit since 2006, and an attempt to put decades of turmoil behind it.
Alak said Iraq’s foreign currency reserves had risen to $49 billion currently from $46.5 billion at the end of 2016, helped by the recent increase in oil prices.
On the Iraqi banking sector, he said it had become more stable but there was no growth. On average, banks will make a “reasonable profit” in 2017, Alak said.
Meanwhile, Trade Bank of Iraq (TBI), a state-owned bank established to facilitate the country’s foreign trade, has applied for a branch licence in Saudi Arabia and obtained verbal approval from the Saudi central bank, said Faisal al-Haimus, chairman and acting chief executive of TBI. TBI has 24 branches in Iraq.
After 25 years of troubled relations starting with the Iraqi invasion of Kuwait in 1990, Saudi Arabia and Iraq began taking steps towards better relations in 2015. In October this year, Saudi energy minister Khalid al-Falih made a high-profile visit to Iraq and state-owned Saudi Arabian Airlines announced it would start flying regularly to the country. (Writing by Saeed Azhar; Editing by Andrew Torchia)