Iraq’s foreign reserves decline amid warnings
Iraq’s foreign reserves decline amid warnings
2025-08-23 09:14
Shafaq News – Baghdad
On Saturday, the head of the Iraq Future Foundation, Manar al-Obaidi, revealed a decline in Iraq’s foreign exchange reserves, warning of its impact on inflation and monetary stability.
Al-Obaidi said in a post, followed by Shafaq News Agency, that “in late 2022, the size of Iraq’s foreign reserves (foreign currencies, gold, and securities) amounted to approximately $91 billion, compared to a cash flow issued by the Central Bank that amounted to 83 trillion Iraqi dinars at the time.”
He added, “With improved oil prices and increased revenues, foreign reserves rose to a peak of $120 billion in mid-2023, while the money supply reached approximately 100 trillion Iraqi dinars.”
He continued, “However, this trend quickly reversed after mid-2023, as reserves began a steady decline, reaching their lowest level of $92 billion in June 2025, a 22% decline and an estimated loss of $1 billion per month, while the money supply maintained its level of approximately 100 trillion dinars.”
He explained that “this decline in foreign reserves, coupled with the stability of the monetary mass, carries a number of risks, including rising inflation in the medium term due to the widening gap between issued currency and foreign exchange reserves, and pressures on the balance of payments that could lead to a further decline in reserves, especially with the decline in oil prices and the rise in the import bill.”
Among the pressures he listed: “The erosion of monetary stability if the current rate of decline, estimated at $1 billion per month, continues.”
He pointed out that “estimates indicate that reserves could fall to less than $85 billion by the end of this year, given that the money supply remains at its current levels or even increases. Although reserves are still relatively high compared to the volume of monetary issuance, a continued decline poses a real threat in the medium and long term.”
He added, ” The current situation calls for a realistic financial reform plan based on reducing unproductive public spending and improving the balance of payments by boosting exports and reducing overreliance on imports.” He emphasized that “halting the decline in foreign reserves has become an urgent necessity to avoid serious repercussions that could affect the stability of the Iraqi economy in the medium and long term.”
shafaq.com
