An economic catastrophe. “Shocking” figures reveal the extent of Iraq’s internal debt. Where is the economy headed?

Iraq is witnessing a sharp increase in domestic public debt levels through 2025, sparking serious debate about the sustainability of the country’s financial situation.

The government downplays the seriousness of the situation, asserting its ability to manage this debt internally, while experts are increasingly calling for budget reform and spending cuts as a radical solution.

Data released by the Central Bank of Iraq reveals a clear jump, with domestic debt recording a new increase, reaching approximately 87.7 trillion dinars (about $66.4 billion) at the end of last June.

According to official statistics, this figure represents an increase of approximately 5.4% compared to 2024, when the domestic debt reached $62.9 billion.

This debt inflation comes amid a near-total reliance on fluctuating oil revenues, which is pushing the government toward domestic borrowing to finance the budget deficit.

Reducing the price of the dinar

Economic expert Ammar Ghassan confirmed that the decision to devalue the Iraqi dinar from 1,450 to 1,310 per US dollar has brought about structural changes in the country’s public finances, most notably an increase in government expenditures and a worsening fiscal deficit.

Ghassan said that this decision increased government spending by about $25 billion annually, leading to a jump in current expenditures from 104 trillion dinars ($78.8 billion) to 125 trillion dinars ($94.7 billion).

He also pointed out that the wage bill alone has increased from 43 trillion dinars ($32.6 billion) to 60 trillion dinars over the past two years.

According to Ghassan’s vision, the country’s rising domestic debt is due to the government’s reliance primarily on the liquidity of public and private banks to finance its domestic and external obligations. This has depleted these banks’ resources and negatively impacted overall economic activity.

Multiple negative repercussions on economic performance

Ghassan warned of the negative repercussions of this situation, which he summarized in the following points:

*Weak monetary policy instruments and their impact on prices: A change in fiscal policy may limit the effectiveness of the central bank’s instruments, raising inflation if there is no coordination between monetary and fiscal policies.

*Worsening budget deficit: Increased government spending increases the burden on the budget and deepens the actual deficit.

*Negative impact on economic growth: Investment in government debt instruments becomes more attractive to the banking sector than lending to the private sector, which hinders credit expansion and impacts growth.

*Erosion of the real value of government financial assets, which reduces the government’s ability to meet its future obligations.

*Increasing domestic debt service burdens could negatively impact citizens’ standard of living, especially if the government is forced to cut social spending necessary to combat poverty and unemployment.

*Deepening economic rentierism through excessive operational spending and neglecting investment in strategic economic activities.

Government assurances

For his part, the Iraqi Prime Minister’s financial advisor, Mazhar Mohammed Salih, affirmed Iraq’s strong financial position and its high capacity to manage its external and internal debts.

Saleh said that the total outstanding external debt is less than $20 billion, half of which is due by 2028. He emphasized that the government allocates specific annual spending lines to service it.

He added, “Iraq has never defaulted on its debt payments,” stressing that “our country’s standing with external creditors enjoys a positive and positive reputation.”

Regarding domestic public debt, Saleh indicated that it is held exclusively by the government banking system, explaining that less than half of it is currently managed by the Central Bank’s investment portfolio with high technical and financial capacity.

“There’s no need to worry,” he said, as monetary and fiscal policies are working to develop innovative repayment mechanisms, including converting debt into investment rights in productive projects within an integrated national fund. He added, “Our country enjoys enormous economic wealth that undoubtedly exceeds these debts.”

New structure to diversify revenues

For his part, economic advisor Alaa Al-Fahd affirmed that there is a fundamental shift in the financial management structure of the Iraqi economy, focused on attracting investment and creating a suitable investment environment.

Al-Fahd explained that the government, as part of its reform program, seeks to diversify sources of income and reduce reliance on foreign loans, while also bridging the financial deficit through domestic borrowing and the issuance of government bonds.

Al-Fahd stressed that investment is the primary driver of reducing dependence on oil, emphasizing the importance of revitalizing the investment sector by attracting foreign investment and implementing banking reforms to create credit strength.

For his part, economic expert Hassan Sheikh Zeini emphasized that domestic debt poses less of a risk than external debt, noting that its increase was a direct result of the decline in oil prices.

He said that the state’s resort to public debt to cover the deficit was a response to insufficient oil revenues, stressing that reducing external debt is an inevitable step to maintain high creditor confidence and avoid international court proceedings.

The economic expert proposed solutions to address the country’s ballooning domestic debt and reliance on oil (oil constitutes 95% of revenues), describing it as a “strategic mistake,” the most important of which are:

*Reducing operating expenses and implementing a fair salary scale.

*Diversifying liquidity sources through productive investment projects instead of over-reliance on taxes and fees.

*Combating corruption in revenues and imposing e-governance on taxes and services to ensure that funds go to the state treasury.

Sheikh Zini emphasized that Iraq’s external debt poses the greatest threat to its reputation and the confidence of international countries and banks in it. Therefore, the speaker added, increasing the internal debt while reducing the external debt places Iraq in a position of trust with international creditors.

Burathanews.com

US poll: Support for troop withdrawal from Iraq

A poll published by The Hill newspaper revealed that most Americans support the withdrawal of their troops from Iraq and Syria and the reduction of the US military presence in the Middle East.

The results of the poll, conducted by Concerned Veterans for America and YouGov, showed that 62% of respondents “somewhat” support withdrawing troops from Iraq, while 27% took a neutral position, and 11% opposed it.

Similar results were recorded regarding Syria, where 61% of survey participants supported the return of soldiers to their homes, while 27% had no clear opinion, and 12% opposed the withdrawal of troops.

The withdrawal of troops from Iraq and Syria was supported by majorities of both Republicans and Democrats, as well as independent voters. Nearly six in ten respondents (58%) believe that the United States should generally “reduce its level of engagement” in the Middle East.

“These data confirm what we have observed for years: veterans and the general public want a foreign policy based on moderation, responsibility, and national interest,” said John Wick, executive director of the Veterans Affairs Organization, commenting on the findings.

He added, “After decades of military campaigns in the Middle East, the US military presence in countries like Iraq and Syria no longer has a clear strategic objective.”

Wick also noted that “most survey respondents, including both Democrats and Republicans, agree with US President Donald Trump that the war in Iraq was a grave mistake.”

The survey was conducted from September 19 to 23 and included 1,000 participants, including veterans, military family members, and members of the general public.

The margin of error for the poll results is 3.7 percentage points.

Burathanews.com

ExxonMobil: We are pleased to sign the century-old agreement to develop and market Iraqi oil.

ExxonMobil, the US-based oil company, expressed its happiness at its return to Iraq, calling it the “deal of the century.”

“We are pleased to sign the Horn of Africa agreement with the Iraqi Ministry of Oil to evaluate exploration, development, and marketing opportunities for oil in Iraq,” the company said in a statement translated by Mail.

ExxonMobil and the Iraqi Ministry of Oil signed a new agreement to return to Iraq. The Iraqi government praised this development and affirmed its “strong interest” in working with major oil companies, particularly American ones, to operate oil fields such as the Majnoon field in Basra .

Miliq.news

Exclusive: The Trump administration sends a “war message” to Iraq: hints at decisive action.

The US State Department issued a stern warning to Iranian-backed armed factions in Iraq on Thursday, vowing to act “decisively” to protect US interests.

A State Department spokesperson told Shafaq News Agency, “The designations of Iran-backed terrorist organizations simply make one thing clear: these groups use terrorism to attack Americans in Iraq in service of Iran’s interests, and have done so for decades. They also exploit Iraq’s economy to fund Iran’s terrorist activities around the world.”

The US spokesman indicated that “under President Trump’s bold leadership, the United States will act decisively to ensure the protection of American interests in Iraq and the region.”

However, the spokesman cautioned that “the United States is committed to its partners throughout Iraq who are working to build a truly sovereign, stable, and prosperous country.”

He added, “The current administration is in constant communication with partners throughout Iraq and supports Iraqi actors who share the United States’ priorities and concerns.”

According to him, there are tangible economic achievements, saying, “Just today, a deal was signed between the Iraqi government and ExxonMobil to develop the Majnoon oil field, and recent US diplomatic efforts have led to the reopening of the pipeline between Iraq and Turkey.”

The US State Department spokesperson stated that “deals like these will deliver real and tangible benefits to both Americans and Iraqis, and are a testament to the partnership between the United States and Iraq.”

Shafaq.com

Iraq wins 32 international lawsuits, saving it from losses estimated at more than $2 billion.

The Ministry of Justice announced on Thursday that it had won 32 lawsuits, arbitrations, and recovery claims over the past three years, from 2023 to 2025, sparing Iraq more than $2 billion in damages.

The ministry explained in a statement today that the total sums recovered amounted to two billion, five hundred and ninety-nine million, eight hundred and eighty-five thousand, three hundred and forty-five US dollars, in addition to forty million euros.

The statement added that these sums were being claimed by foreign entities and international companies in lawsuits filed against the Iraqi state before international courts and arbitration bodies.

Shafaq.com

Prime Minister’s Advisor: The Securities and Commodities Authority ended market chaos and contributed to regulating national investment.

The Prime Minister’s advisor for financial affairs, Mazhar Mohammed Saleh, confirmed on Thursday that the Securities Commission has ended market chaos and contributed to regulating national investment in the country. Saleh told the official news agency that “the Securities Commission has achieved significant results during its journey, most notably the establishment of an institutional market system, a necessary step towards building a sound financial market.”

He added, “The Securities Commission market was properly established through a partnership between the state and the private sector, relying on strong tools, most notably the Iraq Stock Exchange and a financial oversight body that formed a fundamental foundation for embodying the state’s philosophy in this partnership.”

He also explained that “these important results have helped fill the void and established foundations upon which we can quickly build. They have also ended the role of unregulated markets through which domestic capital was channeled abroad, weakening our ability to attract financial capital.”

He continued, “The Securities Commission is the regulatory body for the markets, and its oversight function is to ensure competition and prevent monopolies.” He noted that “the Commission has future responsibilities that align with the Iraqi economic philosophy based on partnership between the state and the private sector, enabling the government to regulate the market and maintain its competitiveness.”

Burathanews.com

Central Bank Governor: We have received 80 applications to establish digital banks.

The Governor of the Central Bank of Iraq, Ali Al-Alaq, announced on Thursday that the bank has received approximately 80 applications to establish digital banks, stressing that the names of licensed digital banks will be announced soon. Al-Alaq told the official agency, “The Central Bank has received between 70 and 80 applications to establish a digital bank. This number can only be licensed according to a set of criteria based on market studies, the nature of the work, and the experiences of other countries, where the number of digital banks usually does not exceed two, three, or four.”

He continued, “Therefore, we have begun vetting processes to determine requirements in a way that ensures that licenses are granted to entities with the best qualifications.” He emphasized, “We are now in the final stages of announcing the banks that will be licensed.”

He added, “Before making the final decision, we engaged Oliver Wyman to review the criteria set by the Central Bank, based on which licenses will be granted.”

Al-Alaq also explained that “the aforementioned company has been studying these criteria over the past few days, having been preoccupied with the banking reform file and the comprehensive plan, and we believe we will receive a final answer within the next few days.”

Burathanews.com

Nechirvan Barzani: The Trump administration represents an opportunity for us.

Kurdistan Region President Nechirvan Barzani said on Wednesday that the administration of US President Donald Trump represents “an opportunity for us.”

“We believe we have good relations with the United States, and we support US President Donald Trump’s policies toward opportunities and stability in the region and in Gaza,” Barzani said in a dialogue session during the Middle East Reform Forum (MERI) held in Erbil, attended by Shafaq News Agency.

He added, “The United States has helped us through many difficult times. We confronted ISIS with US assistance, and their role was supportive of the Peshmerga forces.” He explained, “We see the Trump administration as an opportunity for us.”

Shafaq.com

Al-Sudani confirms the continuation of financial and banking reform.

As part of its efforts to enhance transparency, consolidate governance, and enhance the credibility of state institutions before the international community, the government, headed by Prime Minister Mohammed Shia al-Sudani, continues to implement comprehensive reforms based on applying best financial and administrative practices, combating corruption, and ensuring compliance with laws and regulations, contributing to building a modern national economy.

In this context, the Prime Minister received a delegation from KPMG, a global auditing and financial consulting firm, yesterday, Tuesday. They reviewed existing cooperation with the Iraqi banking sector, ways to support transparency, and enhance the country’s financial reputation internationally. Al-Sudani emphasized that banking reform has become a model of commitment and trust, praising the pivotal role of financial audit firms in consolidating governance and professionalism.

He emphasized the importance of leveraging the company’s expertise in restructuring government companies and raising their operational efficiency, managing public debt, and drafting contracts for major strategic projects. He also affirmed the government’s support for the Central Bank and the Trade Bank of Iraq to ensure the rapid completion of audit tasks in accordance with international standards and the timetable for issuing banks’ final accounts. Regarding administrative reform, the Prime Minister chaired the 40th regular session of the Council, during which he discussed the general situation and took the necessary decisions. In light of the unified report on violations of Law No. 28 of 2019 on the Cancellation of Financial Privileges for Officials, Al-Sudani directed all government agencies to comply with the law and return any excess vehicles or protection within seven days, while referring those who refrain from doing so to the Integrity Commission to ensure the protection of public funds and promote a culture of accountability.

The Council also voted to appoint (15) general managers in various government departments, while it decided to dismiss the Director of the Investments and Contracts Department at the Ministry of Electricity and transfer him to a lower level, based on performance evaluation. These decisions reflect the government’s keenness to achieve administrative reform, enhance efficiency, and link responsibility to accountability, in line with the comprehensive objectives of the government’s program for economic and financial reform.

Alsabaah.iq

The President of the Republic affirms the development of Iraq’s foreign relations and calls for the approval of the oil and gas law.

Iraqi oilPresident Abdul Latif Rashid affirmed on Tuesday that Iraq’s foreign relations are witnessing positive developments, both with neighboring countries and the international community.
Rashid said in a press statement, “The water issue represents a sovereign and vital issue for Iraq, and it is necessary to strengthen diplomatic relations with neighboring countries, especially Turkey, Iran, and Syria, in order to ensure a fair and sufficient share of water that meets the country’s needs.”

He added, “It is important to work on reforming domestic policies in water resource management,” noting that “it is the responsibility of the federal government and the Kurdistan Region to build strong relations based on cooperation and understanding to achieve the aspirations of all citizens.”

The President continued, “The failure to pass an oil and gas law has contributed to the lack of detailed regulation of oil production, export, and revenue distribution mechanisms.” He explained that “the recent agreement between the federal government and the Kurdistan Region on the oil file is a positive and important step toward building trust, but it requires permanent legal consolidation through the adoption of an oil and gas law, which represents the true guarantee of a stable and sustainable relationship between the two parties.”

Alforatnews.iq