FRANK26: "ASRAFLAK !!!... THIS SUGGESTS AN INCREASE IN THE IQD EXCHANGE RATE !!!", 15 APRIL

 KTFA

FRANK26: "ASRAFLAK !!!... THIS SUGGESTS AN INCREASE IN THE IQD EXCHANGE RATE !!!".......F26 

Plunging Oil Prices Jeopardize Iraq’s Budget: Will the Government Resort to Dollar Revaluation?

 

4/13/2025

By Ahora Qadi

ERBIL  –

Iraq is bracing for renewed economic turbulence as oil prices fall below the critical $65 per barrel mark—five dollars short of the benchmark adopted in the country’s federal budget. The slide in global crude markets threatens to erode the very foundation of Iraq’s oil-dependent economy, prompting speculation over potential fiscal and monetary policy shifts.

According to economic analyst Salah Boushi, the continued depreciation in oil prices could severely undermine the state’s ability to fund essential institutions and public services. “The longer this drop persists, the more pressure the government will face,” he told Kurdistan24. “A flexible, carefully calibrated strategy is imperative. Increasing oil production may become necessary to offset lost revenues.”

While some officials advocate for boosting output, others warn against hasty decisions involving Iraq’s monetary reserves. The central bank’s hard currency reserves, considered a last line of defense, are unlikely to be tapped under current circumstances. Still, one policy instrument remains within reach—and contentious: the exchange rate.

Economic expert Ahmed al-Ansari noted that while Iraq’s reserve fund is generally safeguarded for emergencies, adjusting the value of the Iraqi dinar relative to the U.S. dollar remains a plausible option. “We’re unlikely to see the reserves touched, but a revaluation of the dinar, coupled with domestic borrowing, could help bridge a potential deficit,” al-Ansari explained. (ECONOMIC LEAKS ASRAFLAK!!! -F26)

The recent price plunge has also sparked unconventional proposals. Some economists have suggested postponing monthly salary disbursements by an additional ten days—shifting from a 30-day cycle to 40—as a temporary measure to alleviate budgetary stress and delay liquidity shortfalls.

Iraq’s fiscal vulnerability is deeply rooted in its dependency on oil, which constitutes nearly 90% of national revenue. Any significant fluctuation in the global oil market poses a direct threat to the country’s financial stability. As prices continue to fall below projections, the government faces the unwelcome prospect of making “painful” adjustments that could directly affect ordinary citizens.

For Iraq’s population—already grappling with inflation and diminished purchasing power—the prospect of a revised exchange rate raises alarm. A stronger dollar would translate into more expensive imports, triggering a ripple effect on everyday goods and services.

With few viable alternatives in the short term, and in the absence of economic diversification, the Iraqi government may be forced to choose between austerity and structural reform—or risk spiraling into a deeper crisis.

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