Government advisor: Our large foreign reserves protect Iraq from oil price fluctuations.
Government advisor: Our large foreign reserves protect Iraq from oil price fluctuations.
2025/05/30
The Prime Minister’s financial advisor, Mazhar Mohammed Salih, confirmed on Friday that there is a close connection between the Iraqi economy, the activity of the general budget, and international economic shocks.
Salih explained to {Al Furat News} that “this connection moves in two main directions. The first is the world entering a gradual downward cycle in oil prices, starting from the second quarter of the current fiscal year. This means a direct impact on the level of foreign currency inflows into the country, which constitutes revenues for the general budget.”
The other trend indicates that if the oil asset cycle continues in a downward trend, it is expected to take no more than six months before the international economy regains momentum toward better growth and improved demand, leaving the recession phase.
This means, according to Saleh, “relying on a broader role for Iraqi monetary policy, which also has flexible monetary space to support fiscal policy, without public expenditures being exposed to contraction and thus entering recession or depression, according to the readings of such a pattern of oil asset cycles.”
Saleh noted that oil revenues still constitute 90% of the state’s public revenues, and that public spending is responsible for a large proportion of the country’s overall economic activity. This spending directly constitutes 50% of GDP, and indirectly exceeds 87% of it. This demonstrates “the role of the oil factor in influencing the formation of public spending and the general derived aggregate demand.”
However, Saleh emphasized that the presence of large foreign reserves approaching $100 billion gives “the country’s financial leverage the ability to sustain financial transactions well until The global economy has passed its medium-term contraction phase, with the oil asset cycle set to return to an upward trend six months from now.
He noted that these months are “certainly an estimate between a global economic contraction and recession, according to academic readings.”
alforatnews.iq
