Iraq is facing a deepening economic crisis. Economists and lawmakers are urgently calling for reforms. They say falling oil revenues, weak financial systems, and delayed budgets are creating serious risks.
Firstly, Mohammed al-Shabaki, a member of the Finance Committee, pointed to increasing deficits. He explained that cash shortages are worsening across sectors. While other countries use tools like forward contracts or emergency reserves, Iraq lacks these options. As a result, the current safety net may only last two years.
Moreover, Iraq’s 2025 budget originally targeted $152.75 billion. It allocated $99.3 billion for spending, with the rest expected to roll over. However, reduced oil income makes this plan difficult to maintain.
In response, al-Shabaki urged the government to raise non-oil revenues. He believes Iraq must increase them to 30% of total income. Right now, non-oil revenue sits at just 3–4%. Therefore, he recommends stronger tax systems and more effective collection. Importantly, he emphasized that these efforts must remain independent of political influence.
Meanwhile, economist Saleh al-Hamashi blamed financial institutions for the crisis. According to him, both the Ministry of Finance and the Central Bank failed to circulate liquidity. Because of this, many citizens keep money at home. Even though digital payment systems exist, people do not trust banks.
Additionally, Hamashi revealed that Iraq’s money supply is around $97 billion. Shockingly, 70% of this remains outside the banking system. Consequently, the government now depends on domestic borrowing and strategic reserves.
Furthermore, Hamashi criticized the Central Bank’s poor planning. He noted that Iraq still lacks a clear monetary policy. Without a unified vision, recovery remains uncertain.
Adding to the concern, oil expert Nabil al-Marsoumi highlighted a sharp drop in monthly oil revenues. In April, Iraq’s income dropped by 15%, from $7.7 billion to $6.7 billion. He said this decline barely covered salaries and licensing costs. The Oil Ministry confirmed the drop, citing falling oil prices and reduced exports.
Altogether, the Iraq economic crisis continues to escalate. Without immediate reforms, the nation may face deeper financial instability. Time is running out for Iraq’s leaders to take decisive action.