Iraq's government formation in late 2022 has brought respite from the heightened political instability of last year, though governance issues and limited reform momentum persist. After a fiscal surplus estimated at 10% of GDP in 2022, we expect expenditure to increase significantly with the 2023 budget, returning the government's fiscal position to a deficit. Iraq's large oil export capacity will support external surpluses in 2023 and 2024, increasing the country's already strong foreign exchange reserve position. We therefore affirmed our 'B-/B' ratings on Iraq. The outlook is stable. On Feb. 10, 2023, S&P Global Ratings affirmed its 'B-' long-term and 'B' short-term foreign and local currency sovereign credit ratings on Iraq. The outlook is stable. The stable outlook reflects our
