💵🇮🇶 IRAQ & THE DINAR: WHY THE CURRENT STAGE MAY BE A TURNING POINT FOR CONFIDENCE AND FUTURE VALUE 🚀📊
Right now, Iraq is not in collapse — it is in a transition phase that markets are watching extremely closely. The key issue is not just economics, but state functionality and fiscal stability, which directly influence confidence in the Iraqi dinar.
⚠️ 📉 WHAT IS HAPPENING RIGHT NOW IN IRAQ?
🏛️ 1. Budget delays = limited government capacity
Iraq continues operating with constrained fiscal mechanisms, meaning:
- spending is partially restricted
- long-term projects remain stalled
- full economic planning is delayed
👉 This creates short-term uncertainty, but also increases pressure for structural reform.
🛢️ 2. Oil dependency still drives everything
Iraq remains heavily dependent on oil revenues for national income.
Recent challenges include:
- export disruptions at times
- regional instability risks
- global price sensitivity
👉 This directly impacts dollar inflows into the economy.
💵 3. Dollar liquidity is being tightly controlled
One of the most important developments is increased oversight of dollar flows:
- tighter financial monitoring
- restrictions on certain transfers
- stronger banking controls
👉 This is not weakness — it is system tightening and formalization of the financial structure.
📊 🔍 WHY INVESTORS ARE PAYING ATTENTION
Here is what sophisticated observers are focusing on:
✔ Iraq still generates strong oil revenue
✔ The state continues paying salaries and operating
✔ Fiscal reforms are being discussed
✔ Political negotiations are active (budget + governance)
👉 This combination means: the system is stressed, but functioning — not breaking.
🚀 💡 THE REAL STORY BEHIND THE DINAR
The Iraqi dinar is not driven by hype — it is driven by confidence in state stability and monetary discipline.
And right now, the key question being asked is:
👉 Can Iraq move from political fragmentation into fiscal coordination and full budget stability?
If the answer continues trending toward YES, then historically this creates:
- stronger economic visibility 📊
- improved investor confidence 📈
- more stable financial conditions 💵
- reduced uncertainty premium in currency markets ⚖️
🧠 🔑 IMPORTANT INSIGHT
Markets don’t react to emotions — they react to structure.
And Iraq is currently showing signs of:
- slow but ongoing institutional alignment
- increasing financial control mechanisms
- pressure toward budget resolution
- stronger focus on economic management
🌍 📌 FINAL THOUGHT
This is why the current phase is critical:
❌ Short term: uncertainty, delays, and liquidity pressure
✔ Medium term: reform pressure and fiscal restructuring
✔ Long term: potential stabilization of economic fundamentals
👉 In simple terms: Iraq is being pushed toward a more structured financial system — and that is exactly what long-term investors watch before any meaningful currency stability phase.
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Iraq enters 16th month without budget as 4,500 projects stall
Shafaq News
Iraq entered its 16th consecutive month without approving a federal budget while more than 4,500 projects remain suspended across the country, exposing widening strains on public finances, investment planning, and essential services.
The stalled projects include hospitals, schools, bridges, tunnels, water networks, and sewage infrastructure, some frozen since 2014, according to parliamentary Services Committee member Safaa al-Jabri, who warned that delays are increasingly affecting critical sectors such as healthcare and education. “The current situation requires urgent intervention,” al-Jabri told Shafaq News, calling for a “realistic” 2027 budget focused primarily on unfinished and service-related projects rather than “traditional expenditure-based budgeting.”
The prolonged delay has left Iraq operating without a formally approved federal budget since the expiration of the country’s three-year budget cycle for 2023–2025, pushing state institutions deeper into temporary financing mechanisms and limiting the government’s ability to launch new investments.
Under Iraqi law, the government was required to submit the 2025 budget schedules to parliament before the end of 2024. Yet from January 2025 through May 2026, lawmakers neither voted on nor formally ratified the budget tables, leaving ministries and provinces dependent on restricted spending allocations carried over from previous fiscal periods.
Read more: Iraq’s budget: political fiscal gaps threaten national stability in 2025
Prime Minister’s economic adviser Mudhir Mohammed Saleh said Iraq had effectively exited the three-year budget cycle at the end of December 2025 and was now operating under the Financial Management Law No. 6 of 2019. That mechanism allows spending based on the “1/12 rule,” enabling the government to finance salaries and operational expenses through monthly allocations equivalent to one-twelfth of previous annual expenditures.
Saleh told Shafaq News that the arrangement has so far prevented a complete financial breakdown by allowing the continuation of salaries, basic operational spending, and funding for projects already close to completion. However, he stressed that the system blocks the launch of new strategic or investment projects without parliamentary approval of a new federal budget. “The budget is no longer just a technical financial instrument; it has become a tool for economic stability and absorbing external shocks.” He linked the growing fiscal pressure to escalating geopolitical risks in the Gulf, particularly fears surrounding maritime trade disruptions and what he described as the “Hormuz shock,” referring to threats facing oil exports through the Strait of Hormuz.
The political deadlock surrounding the budget also remains unresolved. Finance Committee member Rebar Karim told Shafaq News that passing the 2026 federal budget depends on the formation of the next government and the submission of its program to parliament.
Karim said the committee was prepared to review and approve the budget “within a short timeframe” once the government submits the draft law, adding that parliament had received assurances there was currently no liquidity crisis and that public-sector salaries remained secured for the coming months.
Economic and financial expert Safwan Qusay argued that the crisis extends beyond procedural delays in passing a budget and instead reflects broader vulnerabilities in Iraq’s economic model. “The real challenge is declining oil revenues and the state’s diminishing ability to finance operational spending,” Qusay told Shafaq News.
He called for expanding partnerships with the private sector to reduce pressure on the public payroll system, proposing that some government-run sectors shift toward private operation models while maintaining state ownership. Qusay also urged Iraq to diversify its export routes away from excessive reliance on Gulf shipping corridors, pointing to alternative outlets through Aqaba, Baniyas, and Ceyhan, alongside expanded land transport options.
Read more: What does Iraq's new government promise? A guide to Ali Al-Zaidi's ministerial program
The warnings come amid escalating Gulf tensions and growing fears over disruptions to oil flows through the Strait of Hormuz, which carries around 20% of global oil supplies.
Qusay also warned that weak non-oil exports and heavy import dependence continue to pressure Iraq’s foreign currency reserves and exchange-rate stability, calling for closer coordination between fiscal and monetary policy.
The absence of a budget has also intensified concerns over employment and recruitment, with ministries unable to move forward on large-scale hiring or development plans under temporary spending rules.
The debate comes as Prime Minister Ali al-Zaidi’s government attempts to frame its upcoming fiscal agenda around economic reform, diversification of state revenues, and reduced dependence on oil income. Al-Zaidi has recently pledged that the next budget will prioritize productive and service-oriented projects while tightening spending controls, combating corruption, and expanding job opportunities.
https://shafaq.com/en/Report/Iraq-enters-16th-month-without-budget-as-4-500-projects-stall