Exchange rate and diversification of income sources: The government faces complex economic and financial challenges.
Exchange rate and diversification of income sources: The government faces complex economic and financial challenges.
6-7-2026
The ongoing crisis in the region has directly impacted Iraq’s economy, through the decline in oil exports , on which the government directly relies to replenish the state treasury and allocate funds for operational expenses. This places the al-Zaidi government before difficult choices, requiring it to diversify income sources and revitalize the country’s economy without resorting to fateful decisions that could inflame public opinion, especially as the government formation process begins and the political establishment awaits the finalization of the cabinet and the vote on it in the coming days.
Imran Karkoush, a member of the State of Law Coalition, told Al-Maalomah, “The government does not want to risk any decisions that could ignite Iraqi public opinion and thus directly affect the street, especially with the arrival of summer and the significant problems that often accompany this season, namely energy, fuel, and other services.”
He added, “It is unlikely that al-Zidi, at the beginning of his term as Prime Minister, will take any decisions to raise the dollar exchange rate in the local markets during his first 100 days in office, as such a decision would create a major problem, especially for the country’s economy.”
He explained that “the issue of the dollar exchange rate has not been studied by al-Zidi’s government, nor has it been discussed by the current government, and the Prime Minister has not raised any such issue concerning the value of the dinar against the dollar.”
For his part, political analyst Raji Nassir told Al-Maalomah that “the delay in approving the budget does not only affect administrative aspects, but also directly impacts the progress of investment projects and development spending in various sectors. Continuing to spend according to the Financial Management Law provides a temporary solution for operational expenses, but it does not compensate for the need for a comprehensive budget that defines the state’s economic priorities.”
He continued, “Iraq faces accumulated financial challenges related to high operational expenses and continued reliance on oil as the primary source of revenue, which makes it more vulnerable to any shocks or declines in crude oil prices, especially since the budget delay weakens the government’s ability to launch new projects or implement economic programs that contribute to stimulating the local market.”
He pointed out that “the current stage requires expediting the resolution of the budget issue and establishing a clear financial vision that ensures addressing the potential deficit and diversifying income sources away from oil revenues.”
In a related context, MP Bassem al-Gharabi confirmed to Al-Maalomah that “the current regional and international tensions foreshadow economic repercussions that could directly affect Iraq, especially given the general budget’s heavy reliance on oil revenues.”
He added that “successive governments have failed to diversify national income sources and build productive sectors capable of supporting the economy and reducing dependence on oil, which has made the Iraqi economy vulnerable to global changes.”
He noted that “the government may be forced to resort to domestic borrowing to confront potential financial pressures, at a time when external borrowing options have become more complicated due to international tensions and the disruption of energy markets and supply chains. Therefore, the current stage requires expediting the implementation of genuine economic reforms and diversifying revenue sources to avoid any financial crisis that could affect the country’s economic stability.”
almaalomah.me
