ERBIL, Kurdistan Region - The outlook for Iraq’s financial situation is stable with oil prices still hovering above the threshold set in the federal budget, an advisor to Iraq’s prime minister said on Thursday.
“The federal general budget for the year 2024 is still stable, with an expenditure ceiling of about 199 trillion Iraqi dinars and allocations in investment expenditures exceeding 25 percent of the total expenditure ceiling,” Mazhar Mohammed Salih, financial advisor to Prime Minister Mohammed Shia’ al-Sudani, told state media.
Iraq passed its highly-contentious budget bill for the years 2023, 2024, and 2025 in June, which includes a record $152 billion in spending. The massive expenditure has sparked concerns of instability should oil prices drop below the $70 per barrel threshold set in the bill.
“Oil market indicators are still more than the price specified in the budget by more than 10 percent at the moment,” Salih said, adding that the increase in demand for crude oil globally has also alleviated the stress on Iraq’s finances.
“There is high stability as we enter the second month of the current year, which indicates that the budget is balanced and carries some surpluses, so the situation is stable and sound,” he affirmed.
However, instability in the value of the Iraqi dinar has also threatened the stability of the budget law. The federal budget set the exchange rate of $1 to 1,300 Iraqi dinars, but ongoing smuggling has prevented the value from being reached, with the value of the dollar currently sitting at around 1,500 IQD in the currency markets of Iraq and the Kurdistan Region.
The depreciation of the Iraqi dinar has been attributed to the smuggling of dollars out of the country, mainly to neighboring Iran.
In October, Salih told Rudaw that Iraq’s foreign exchange reserves were the highest recorded in its history, exceeding $100 billion. He said this “supports the Iraqi dinar.”
