Currency printing in Iraq: Between financial need and economic risks to the dinar
Currency printing in Iraq: Between financial need and economic risks to the dinar
4-19-2026
Information/Report…
Concerns are mounting in Iraqi economic circles about the possibility of the government resorting to printing money without real backing in gold or dollar reserves. Experts describe this as an “unsound option” due to its direct negative impact on the value of the national currency and economic stability. Additional money printing means increasing the money supply while the supply of goods and services in the economy remains stagnant or slows. In such cases, prices tend to rise because more money competes for the same quantity of goods, generating inflation that can turn into hyperinflation if it persists and economic conditions worsen, as happened in other countries like Zimbabwe and Venezuela.
In this context, the experiences of many countries have proven that printing money to finance budget deficits or cover current expenditures without achieving equivalent productive growth leads to a decrease in the currency’s value and a loss of confidence in it.
The central bank plays a pivotal role in controlling inflation and maintaining the currency’s value through monetary policy tools such as setting interest rates and monitoring liquidity.
In advanced economies, the central bank maintains its independence from the government to avoid its decisions becoming tied to financing budget deficits through money printing.
In Iraq, experts emphasize that any unplanned printing of money, coupled with the deficit in foreign reserves and the budget, could place the Central Bank in a difficult position, forcing it to balance its responsibilities to support public finances with its duty to maintain the stability of the dinar.
Economist Nabil al-Ali called on the Central Bank of Iraq to develop an urgent plan to contain the repercussions of monetary inflation, warning of a significant decline in the Iraqi dinar’s exchange rate as a result of current monetary policies.
In a statement to the Al-Maalomah news agency, al-Ali said, “The government is currently relying on printing money to secure salaries and expenditures under the guise of the borrowing law.” He explained that “the continuation of this mechanism will put the Central Bank in a difficult position and may force it to deplete its reserves to cover the shortfall.”
Al-Ali stressed the necessity for “the Central Bank to withdraw the printed currency from circulation as soon as it is no longer needed, and to destroy or store it instead of recycling it.”
He indicated that “this measure is the only way to maintain exchange rate stability and prevent monetary inflation that threatens the purchasing power of citizens.”
Furthermore, the crisis can worsen when the public loses confidence in the currency, leading them to convert their savings into foreign currencies or other assets. This negatively impacts the flow of liquidity into the economy and weakens the banking system.
Experts and analysts argue that economic solutions do not lie in printing more money, but rather in reforming fiscal and monetary policies to address the deficit.
According to economic analysts, sound monetary policies and central bank restrictions on money issuance are fundamental pillars for maintaining currency stability and preventing its collapse in the face of external shocks.
almaalomah.me
