Iraq’s Credit Default Risk Lowers

The current RGE reports state:

• Credit default risk on Iraq's debt has fallen since UAE announced plan to forgive $7 billion in Iraqi debt, the first gulf country to forgive all Iraqi debt. Credit default risk of Iraq is lower than of many US financial institutions (Reuters)

• Rumors that Kuwait may forgive outstanding debt of Iraq (compensation from Gulf War) take place in the context of a general thaw in Iraq's relations with Sunni Arab governments in the region in mid-2008. The reduction of Iraq's debt by official creditors should bring its overall external debt stock to around $50 billion. Saudi Arabia announced plans in 2008 to cancel 80% of Iraqi debt but has yet to follow through