Iraq’s public spending and domestic debt decline for the second month in a row, showing signs of tighter financial control. The latest figures from the Central Bank of Iraq reveal both indicators moved slightly lower. This development reflects a cautious approach to fiscal management as the country navigates economic uncertainty.
Public expenditure reached 9.35 trillion Iraqi dinars, which equals about 6.67 billion dollars. This marked a 1.48% drop compared to the previous month’s 9.49 trillion dinars. It also showed a sharper 12.4% fall compared to the same month last year. The decline suggests government spending is adjusting to the challenges of revenue fluctuations.
Domestic public debt also edged down slightly. It stood at 85.50 trillion Iraqi dinars, or roughly 60.95 billion dollars. This was only a minor decrease from the previous month’s 85.54 trillion dinars. However, compared to the same period last year, domestic debt rose by 8.56%, highlighting a longer-term upward trend.
The Central Bank data points to a broader fiscal picture shaped by oil revenue dependency. Oil sales still make up around 85% of Iraq’s budget and over 90% of its export earnings. This high reliance makes the economy highly sensitive to global oil price swings. When oil prices fall, Iraq faces immediate pressure on revenue and spending.
Analysts expect Iraq’s government debt to reach about 44% of GDP by the end of next year. This projection takes into account unpredictable oil income and ongoing expenditure needs. The government’s aim appears to be balancing necessary spending with cautious borrowing. The recent dip in Iraq’s public spending and domestic debt decline could be part of this balancing act.
In the short term, Iraq must manage these shifts while safeguarding essential services. In the long term, diversification beyond oil could help reduce financial risks. Expanding non-oil sectors like agriculture, manufacturing, and tourism would create more stability. This approach would also shield the budget from external shocks.
Overall, the figures suggest a moment of cautious adjustment. While the drop in Iraq’s public spending and domestic debt decline signals tighter fiscal control, the economy still faces oil-driven challenges. Decisions in the coming months will likely focus on controlling debt without slowing necessary investment.