Dollar Rise, Salary Cuts, and Food Rations at Risk
Iraq Begins Implementing the White Paper Reforms
Iraq has officially entered a new phase of economic reform. According to economist Nabil Al-Marsoumi, the country has already begun implementing the “White Paper”, an economic reform framework supported by the International Monetary Fund (IMF) and the World Bank.
These reforms are designed to manage economic crises in developing countries—but they come with significant social costs, particularly for the poor and middle class.
Important Clarification on Exchange Rate Language (Mnt Goat)
Before diving deeper, Mnt Goat provides a crucial clarification often misunderstood in Iraqi economic reporting:
When articles mention “raising the rate” of the dinar, they usually mean:
Raising the sanctioned exchange rate (e.g., from 1320 to 1440)
This is actually a devaluation
When articles mention “reducing the rate”, they usually mean:
Lowering the sanctioned rate (e.g., from 1320 to 1166)
This represents a revaluation
This distinction is essential to correctly understand Iraq’s monetary policy discussions.
Economist Nabil Al-Marsoumi Explains the White Paper
On Friday, December 12, 2025, Al-Marsoumi discussed the repercussions of the White Paper in a blog post titled:
“The First Option for Economic Reform (The White Paper)”
He explained that the IMF and World Bank believe economic crises in developing countries stem from macroeconomic policy failures , and that correcting these failures requires fundamental policy changes, even at the expense of social welfare programs.
Core IMF Reform Package Explained
According to Al-Marsoumi, the IMF-backed reform package includes:
Reducing the exchange rate of the national currency and then floating it
Raising interest rates and imposing credit ceilings
Gradually reducing government subsidies
Cutting public spending on goods and services
Reducing the salary budget and limiting government hiring
Restructuring and privatizing loss-making public sector institutions
Reducing social transfer spending, including food subsidies
Raising energy prices to global levels
Raising taxes, expanding the tax base, and reducing exemptions
Liberalizing prices and trade
Iraq Began Implementing the White Paper in 2020
Al-Marsoumi notes that Iraq began implementing these reforms in 2020, following:
The collapse of oil prices
The global economic shutdown due to COVID-19
Under the White Paper, Iraq committed to several major actions.
Key Measures Already Underway in Iraq
🔹 Salary and Wage Reductions
Reduce the wage and salary bill from 25% of GDP to 12.5% within three years
Halt new government hiring and replacement
🔹 Tax Expansion
Apply income tax to:
Allowances
Bonuses
Incentives and benefits
🔹 Subsidy Cuts and Ration Card Changes
Reduce government support from 13% of GDP to 5%
Limit ration cards to those under social protection programs
Resulting in:
Higher fuel prices
Higher electricity prices
Higher food prices
Increased inflation
🔹 Dollar Exchange Rate Increase
Raise the dollar exchange rate against the dinar by 23%
This move had a negative impact on:
Low-income citizens
The middle class
Social Cost of the White Paper
Al-Marsoumi concludes with a clear warning:
“Implementing the White Paper reforms entails a heavy social cost borne by the poor and those with limited income.”
He also indicates that this reality may require exploring alternative national reform options that better balance economic stability with social protection.
Featured Snippet: Key Insight
What is the White Paper reform in Iraq?
The White Paper is an IMF-backed economic reform program aimed at restructuring Iraq’s economy through subsidy cuts, salary reductions, tax increases, and exchange rate adjustments.
Google Discover Highlight
Iraq has officially begun implementing IMF-backed White Paper reforms. While aimed at stabilizing the economy, economists warn the measures carry significant social costs, including higher prices, salary constraints, and reduced subsidies.
Q&A Section
❓ What is Iraq’s White Paper?
An economic reform plan supported by the IMF and World Bank to address structural weaknesses in Iraq’s economy.
❓ Why did the dollar rise against the dinar?
As part of IMF-backed reforms, Iraq raised the sanctioned exchange rate, effectively devaluing the dinar.
❓ Who is most affected by these reforms?
According to economists, the poor and middle class bear the greatest burden.
❓ Are food rations being canceled?
Ration cards are being reduced and limited to social protection recipients, leading to higher food costs.
Final Thoughts
The implementation of Iraq’s White Paper marks a turning point in economic policy. While designed to stabilize finances and satisfy international institutions, the reforms come with real and immediate social consequences.
As economist Nabil Al-Marsoumi notes, the challenge now lies in balancing economic reform with social justice, a task that may require new national solutions beyond the current framework.
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