Iraq Faces Potential Economic Downturn

Iraq is facing a severe financial crisis due to a significant decline in its oil revenues, especially after the closure of the Strait of Hormuz and the halt of oil exports. This has led to a drop in revenues to approximately $2.3 billion per month in May and June 2026, while the government requires about $8.24 billion monthly to cover salaries and essential obligations. The Minister of Health revealed that the government is dealing with a monthly deficit of approximately 3.2 trillion dinars (around $2.4 billion) to meet the payroll needs, prompting it to implement austerity measures, including reducing funding for initiatives like the ration card program and cutting the number of beneficiaries. There is also the possibility of resorting to domestic and foreign borrowing if the crisis persists. Experts explain that this crisis stems from Iraq’s over-reliance on oil, which has been worsened by political disagreements that have hindered projects aimed at diversifying export sources. This situation threatens the salaries of employees and the provision of public services with significant risks.

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