At a Glance

• Deficit reaches 13 trillion IQD
• Revenues fall short of spending
• 50 trillion IQD needed by year-end
• Oil exports and reserves under review

Information obtained by Channel8 indicates that Iraq is facing a 13 trillion Iraqi dinar fiscal deficit during the first five months of the year, prompting the government to consider expanded oil exports, customs reforms, debt recovery, and the possible use of foreign currency reserves to cover its financial obligations.

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Key Statements and Focus Area

• Government spending reached more than 46 trillion IQD, compared with 33 trillion IQD in revenues during the first five months.
• Iraq requires an additional 50 trillion IQD over the remaining five months to cover salaries and core operating expenses.
• Authorities are targeting exports of up to 750,000 barrels per day through Ceyhan while increasing output from the Kirkuk fields.
• Iraq holds approximately $93 billion in foreign currency reserves that could be used to absorb financial pressures.

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Iraq recorded a fiscal deficit of approximately 13 trillion Iraqi dinars during the first five months of the year, as government expenditures exceeded revenues.

Public spending surpassed 46 trillion dinars, while total revenues reached around 33 trillion dinars, leaving a significant gap that Baghdad must address as it approaches the final five months of the year.

The government is estimated to require an additional 50 trillion dinars to maintain public-sector salaries and essential operating expenditures through the end of the year.

Baghdad is prioritizing increased crude exports as one of its main measures to strengthen state revenues.

Iraq is working toward exporting 750,000 barrels of crude oil per day through Turkey's Port of Ceyhan while also seeking to increase production from the Kirkuk oil fields.

To attract buyers and maintain market share, Iraq is offering discounts of between $27 and $30 per barrel on Basra Medium and Basra Heavy crude grades.

The government is also considering the Syrian route as an additional export channel.

Authorities are pursuing reforms at land and air border crossings to increase non-oil revenues and strengthen customs collection.

The government also intends to recover part of the approximately 64 trillion IQD in outstanding state advances and loans issued to citizens and companies.

These measures are intended to provide additional revenue without relying entirely on oil exports or new borrowing.

Iraq currently holds approximately $93 billion in foreign currency reserves, providing the government with a potential financial buffer during the current revenue shortfall.

Authorities could draw on the reserves to absorb part of the fiscal shock, similar to the approach taken in 2014, when reserves fell to approximately $38 billion as Iraq financed the war against ISIS.

The Iraqi Parliament is scheduled to hold an extraordinary session to discuss the country's financial situation and hear from the Minister of Finance.

The Parliamentary Finance Committee is also examining options, including external borrowing and the possibility of issuing additional currency.

Economic experts have warned that relying on new debt to finance recurring operational expenditures, particularly public-sector salaries, could create deeper structural problems for Iraq's finances.

FYI

Iraq's public finances remain heavily dependent on oil revenues, while salaries, pensions, and government operating costs account for a large share of recurring expenditure. The current deficit has increased pressure on Baghdad to expand oil exports, strengthen non-oil revenue collection, recover outstanding state funds, and manage its foreign-currency reserves while avoiding financing recurring expenditures through unsustainable borrowing.

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