Iraq awaits "financial challenges".. Dollar scarcity, liquidity declines, and salary reserves are sufficient for 6 months
International economics expert Nawar Al-Saadi confirmed today, Friday (January 10, 2025), that Iraq is facing major and dangerous financial challenges, and these challenges must be avoided through real reforms.
Al-Saadi said in an interview with Baghdad Today that “the financial challenges in Iraq are ongoing, but recently they have begun to threaten its monetary stability and raise concerns about their impact on the government’s ability to pay salaries in the coming months.
I do not believe that they will lead to an inability to pay salaries, as the Ministry of Finance has a reserve that may reach at least 6 months, but this concern stems from several data and indicators that have emerged recently, including that the Iraqi economy depends almost entirely on oil revenues, which represent the main source of government revenues, and any decline in global oil prices leads to a reduction in these revenues, which puts additional pressure on the general budget and increases the possibility of a financial deficit.”
He pointed out that "there are problems related to foreign currency management, as dollar smuggling operations have worsened through some unofficial outlets and weak supervision of banks, which has led to a shortage of dollars in the local market and a decrease in general liquidity. This affects monetary stability and puts the government in difficulty in financing salaries, especially with the increasing reliance on cash reserves to cover this deficit."
He added, "The banking sector suffers from a lack of confidence among citizens, as many prefer to keep their money outside the banking system, and this behavior contributes to reducing the cash flow available in the market, which adds further complexity to the financial situation."
The international economics expert concluded by saying, "In short, Iraq's financial situation requires urgent reform steps that include diversifying sources of income, improving revenue management, and enhancing citizens' confidence in the banking system, to avoid a liquidity crisis that could have broad repercussions on the economy and society." link
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