Temporary reassurance is not enough… What awaits the Iraqi economy in the next stage?
Temporary reassurance is not enough… What awaits the Iraqi economy in the next stage?
5-24-2026
Information / Report…
The Iraqi economic scene is witnessing escalating debate regarding the nature of the current financial crisis and how to address it amidst fluctuating oil revenues and challenges related to regional stability, particularly concerning securing employee salaries and the sustainability of public finances.
In this context, economist Hashim al-Haboubi warned against the government resorting to printing local currency as a solution to the financial crisis, arguing that this measure could exacerbate economic pressures and negatively impact the value of the Iraqi dinar.
Al-Haboubi told Al-Maalomah that “printing local currency will have serious repercussions, most notably a decline in the dinar’s purchasing power against foreign currencies, especially the dollar.” He pointed out that “this option could lead to the depletion of sovereign reserves of gold and foreign currency.”
He added that “Iraq possesses reserves estimated at approximately 147 tons of gold and more than $114 billion, in addition to financial assets in the foreign reserves, which requires careful management, far removed from ill-conceived expansionary policies.” He called on the government to “adopt a strict austerity program focused on reducing unnecessary expenditures and restructuring public spending.”
According to Al-Haboubi, “there are large expenditure items that burden the budget, including administrative allowances, consultant salaries, and duplication of employment in some state institutions.” He emphasized that “true reform begins with controlling spending, unifying salary systems, and limiting unnecessary appointments.”
In contrast, financial and banking expert Mustafa Hantoush offered a more optimistic assessment of the financial situation, asserting that the oil revenue crisis, despite its severity, does not directly threaten the state’s ability to pay employee salaries at present.
In an interview with Al-Maalomah, Hantoush explained that “the decline in oil exports due to regional tensions and transportation restrictions has clearly impacted monthly revenues, which have witnessed a gradual decrease in recent months.” He added that “the state is still capable of managing this decline through various financial instruments.”
He pointed out that “the Central Bank of Iraq’s reserves, exceeding $94 billion, represent a key safety valve for the economy, enabling it to intervene when necessary to ensure market stability and finance essential obligations, primarily salaries.”
Hantoush further explained that “the Central Bank possesses multiple tools, such as managing foreign reserves, selling dollars, discounting remittances, and the ability to issue currency within carefully considered limits, which helps bridge temporary financial gaps.”
He added that “a prolonged crisis could impose additional pressures, but the state’s ability to cover basic expenditures remains in place for at least five to six months,” emphasizing that “employee salaries are secured until the end of the year, and there are no indications of an immediate crisis in this regard.”
Amid warnings of a widening budget deficit, calls for austerity, and assurances of strong foreign currency reserves, the issue of public finances in Iraq remains a subject of widespread economic debate, with anticipation surrounding the impact of oil and regional developments on the general budget in the coming period.
almaalomah.me
