Measuring and analyzing the relationship between investment spending and the sustainability of public debt in the Iraqi economy for the period (2004-2020)

Abstract

The aim of this study is to reveal the nature of the relationship between investment spending in both parts (governmental and private) and the sustainability of public debt in both parts (internal and external) in the Iraqi economy for the period (2004-2020). Through the interpretation of the reality of the performance of the two variables, as well as the completion of a standard model through which testing The nature and direction of the relationship between investment spending and the sustainability of public debt in Iraq. In order to achieve the objectives sought by the study and to test its hypothesis the descriptive analytical approach was relied upon in this study, and causality (Granger، Toda-Yamamoto) was used for the short and long term، and it is considered one of the most important standard tests in determining the direction and nature of the relationship between economic variables. It was found through the study that there is a long-term equilibrium relationship between investment spending and the sustainability of public debt in Iraq. The study also showed that the effect of the sustainability of public debt on public investment spending in Iraq has a reverse effect، as an increase in the sustainability of public debt by (1%) will reduce public investment spending in Iraq by about (117%) of that percentage. The study also showed that there is a positive، long-term equilibrium relationship between private investment spending and the sustainability of public debt in Iraq، as an increase in private investment spending by a certain percentage will lead to an increase in the sustainability of public debt by about a quarter of that percentage، and the most important thing recommended by the study is the need to manage public spending In order to control public funds and benefit from them and not waste them in order to achieve high growth rates، and in order to achieve the conditions of sustainability، work must be done on setting a financial policy and a clear future plan in order to deal with public debt، which came as a result of debt accumulation for a number of years، and in order to achieve this The goal is to find alternative financing sources to finance the general budget deficit instead of borrowing.