This research attempts to examine the relationship between the public debt-to-GDP ratio and unemployment rates to determine the possibility of reducing unemployment rates in the Iraqi economy. It also analyzes the nature of the relationship between these indicators to ensure the sustainability of national economic growth and its ability to withstand various shocks. The findings reveal that the Iraqi economy has attempted, through various economic policies, to increase public revenues to maintain the sustainability of public debt. However, this has been financed primarily through oil revenues, neglecting other sources such as taxes or other income-generating activities.
This reinforced the imbalance in the budget structure in paying the installments of the public debt or the interest due on it, as the period of the study witnessed a decrease in the size of the public debt in absolute values and as indicators of output and a decrease in unemployment rates while they stabilized around 0.15. The decrease in unemployment rates was not a response to the decrease in debt, but rather came as a result of employment policies in the public sector far from the marginal productivity of labor. Economic measurement proved the existence of an integrated relationship between the variables of public revenues, public debt and unemployment rates, and that short-term changes can modify long-term changes. Providing financing enhances the sustainability of the economy by supporting economic policy reforms that reduce various risks to the national economy associated with various shocks, providing room for action through policies and increasing the financial safety margin to mitigate risks arising from long-term structural challenges, and providing greater scope to address debt resulting from financing to sustain growth in the output structure and public finances of the state and reduce unemployment.