An economist says: Borrowing narrows Iraq’s economic options, and the solution lies in rationalizing spending.
An economist says: Borrowing narrows Iraq’s economic options, and the solution lies in rationalizing spending.
2026/05/28
Economic expert Manar Al-Obaidi confirmed that the continued decline in oil revenues and the government’s inability to compensate for them with alternative sources has limited the available economic options to a narrow corner, making borrowing the only way to cover monthly expenses amounting to about ten trillion dinars.
Al-Ubaidi explained in a statement, a copy of which was received by Al-Furat News, that “borrowing is not a radical solution, but rather may become a factor exacerbating the crisis.” He pointed out that public debt interest reached approximately seven trillion dinars in 2025 and is expected to exceed ten trillion dinars this year, equivalent to about 10% of total mandatory operating expenses.
He indicated that “the danger of the current path lies in the possibility that the government will reach a stage where it borrows to pay debt interest instead of funding public services.” He stressed that the real solution lies in rationalizing operating expenses, primarily salaries and social welfare, emphasizing that there is ample room for reform without affecting the citizen’s standard of living.
Al-Ubaidi cited the success of audits in the social welfare program during the first quarter of this year, which saved approximately 700 billion dinars. This means that more than 2.8 trillion dinars could be saved annually simply by partially reviewing beneficiary data. He questioned the size of the savings that could be achieved if the review included salaries and other areas of expenditure.
Al-Ubaidi concluded that the economic equation imposes two options, with no third alternative. Either we continue borrowing and turn debt into a structural constraint for decades to come, or we control and rationalize spending in pursuit of a gradual balance that protects the economy and the citizen’s standard of living, far from excessive optimism based on inaccurate impressionistic readings.
alforatnews.iq
