German website: Iraq’s financial crisis is due to government extravagance.
German website: Iraq’s financial crisis is due to government extravagance.
7-10-2025
Information: Translation..
A report by the German website BNN IntelliNews confirmed on Thursday that the financial crisis in Iraq reveals the dangers of extravagance in a country whose economy depends on oil production, where the money being counted from abroad is obscene.
The report, translated by Al-Maalouma Agency, stated that, “According to the International Monetary Fund, Iraq’s budget deficit will double from 4.2 percent of GDP this year to 9.2 percent by 2026. Oil revenues, which constitute more than 90 percent of the state’s income, are expected to decline from $99.2 billion in 2024 to just $79.2 billion two years later.”
Meanwhile, public spending continues its steady rise, driven by a ballooning public sector wage bill that will consume nearly a quarter of GDP by 2026. Regional development and Iraq’s unique style of governance, through the Kurds and Baghdad, have created potential conflict. The report
explained, “Such numbers would be alarming anywhere, but in Iraq, a country that has teetered from crisis to crisis for decades, they portend potential disaster. The International Monetary Fund calculates that Iraq now needs an oil price of $84 per barrel to balance its balance sheet, a 55 percent increase from the $54 required in 2020. With Brent crude trading around $70 and facing downward pressure from global economic tensions, this break-even point looks increasingly illusory. No matter how many deals the government signs, the bills keep piling up.”
The report noted, “For years, Iraqi governments have pledged to wean the economy off oil, but reality tells a different story.” Non-oil economic growth has collapsed from 13.8 percent in 2023 to just 2.5 percent this year, with a further slowdown expected to just 1 percent. This contrasts sharply with the Ministry of Finance’s optimistic forecast of 4 percent non-oil growth, a gap that exposes the gap between official rhetoric and economic reality on the ground, potentially unraveling years of hard-won gains thanks to relative stability.
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