Iraqi government grants guarantees to international investors

BAGHDAD, January 27 — Mohammed Al-Daraji, Adviser to the Prime Minister for Technical Affairs, announced the Iraqi government’s initiative to support the establishment of private sector factories by four international companies through the provision of sovereign guarantees.

In a statement to the official newspaper Al-Sabah, Al-Daraji noted, “For the first time, the Iraqi government is backing the private sector with sovereign guarantees.” He explained the global context, saying, “Typically, private companies finance factory construction based on expected purchases and usually require guarantees, feasibility studies, or enter into partnerships. Iraq’s situation is unique due to its lower credit rating and perceived high risk, which has previously hindered the private sector’s access to such global advantages.”

Al-Daraji emphasized the government’s role in integrating the private sector into the global economy. The approved budget law by the parliament permits the government to offer sovereign guarantees to reputable companies establishing factories in Iraq. These guarantees are meant to provide a layer of financial security to investors, countering the risks associated with Iraq’s challenging economic and political environment. This measure is intended to attract foreign investment that may be shy towards entering the Iraqi market.

“The committee in charge has begun promoting this initiative globally to international companies from countries including Germany, Italy, South Korea, Japan, China, and Spain, as well as the Islamic Development Bank, all of whom have shown approval and interest,” he added.

Al-Daraji confirmed that four industrial projects in the pharmaceutical, food, construction, and chemical sectors are piloting this approach. The guarantees provided to external entities financing these projects will ensure the reservation of the factory until the Iraqi private sector can pay for it post-operation, thereby eliminating the need for sovereign guarantees at that stage.