The government’s financial advisor: The fiscal deficit is short-term and will not hinder the development process.
The government’s financial advisor: The fiscal deficit is short-term and will not hinder the development process.
2026-01-10
The Prime Minister’s financial advisor, Mazhar Muhammad Salih, confirmed on Saturday that the financial deficit is short-term and will not hinder the development process. Salih told the official news agency that “the financial deficit in Iraq is mostly related to fluctuations in oil prices,” explaining that “investors realize that this deficit does not necessarily reflect institutional weakness, as much as it reflects global market fluctuations beyond national control.”
He added that “this perception becomes more firmly established when the deficit is accompanied by disciplined financing tools, such as issuing domestic bonds and sound management of public spending, which sends a clear message of confidence that the government is able to control the course of public finances and not slide into chronic imbalances.”
He explained that “the presence of strong financial institutions, foremost among them the Central Bank of Iraq with its independence under Law No. 56 of 2004, constitutes an important reassuring factor for investors, as it reflects the state’s ability to absorb external financial shocks and maintain monetary stability.”
He also pointed out that “despite the financial deficit, a number of investment attractions stand out that enhance investor confidence, most notably the low external public debt, a rare strength in the surrounding regional countries, as it means that Iraq is not burdened with stifling international obligations, which opens up a wider field for financing investment and future growth.”
He also pointed out that “the relative weight of foreign reserves provides a solid cover for the national currency and gives investors high confidence that financial transfers and capital movements will not face severe restrictions or sudden disruptions,” explaining that “the stability of the exchange rate, even in the presence of a fiscal deficit, creates a predictable economic environment, which is one of the most important criteria that foreign investors look for when making their long-term decisions.”
He emphasized that “the government’s commitment to major strategic projects in the fields of energy and infrastructure, such as the Development Road project, sends a clear positive signal to the investment community that the short-term financial deficit will not hinder the development process, nor limit Iraq’s ambitions to achieve sustainable economic growth and prosperity.”
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