Iraq Economic News and Points To Ponder Monday Afternoon 12-29-25
The Economic Risk Map That The World Has Drawn Up For Iraq During The Year 2025
Economy 22-12-2025, | 602 Deep Structural Imbalances Baghdad Today – Baghdad In the assessments of international institutions regarding Iraq's situation in 2025, it is not viewed as an economy heading towards a single, specific crisis, but rather as a system living on a delicate balance: a state that finances itself from a single resource, consumes most of its revenue on current expenditures, postpones the development of a productive economy, and is then surprised to find that shocks do not come in isolation, but rather as simultaneous waves linked to oil prices, production decisions, water scarcity, youth employment, and investor confidence.
This is why reports repeatedly describe the situation as one of deep structural imbalances that cannot be remedied by temporary abundance or masked by circumstantial improvements.
Dangerous Dependence On Oil
The most consistent observation in the 2025 reports is that oil continues to dictate the pace of a nation's economy before it dictates the pace of the market. When a country's revenues are so tied to a highly volatile market, any change in prices or production levels can shift it from a position of substantial spending to one of strain in a short period. This dependence not only signifies financial vulnerability but also means that policy itself becomes a recurring crisis management exercise, adapting to the ever-changing oil price landscape.
Public Finances Under Constant Pressure
Reports link the fragility of oil revenues to the structure of public spending. The issue is not simply whether or not there is a deficit, but rather the composition of the budget: salaries, pensions, subsidies, and transfers, compared to productive investment that is insufficient to transform the economy. In this context, there is a recurring warning about the inflation of current spending at the expense of development spending, which makes the state less resilient in the event of an oil shock or an emergency.
An Undiversified Economy And A Sluggish Private Sector
Conversely, reports indicate that the non-oil sector is operating below its potential, and that years of relative stability have not automatically translated into rapid and sustainable growth. They add that the private sector remains constrained by chronic factors: bureaucracy, limited access to finance, weak competition, unstable policies, and state dominance over broad economic sectors. Without a clear regulatory environment and a vibrant financial market, private investment remains too weak to become a major engine of job creation.
Finance And Banking: A Hurdle That Delays Investment
One of the most frequent findings in the reports is that the financial system is not playing its full role in driving the economy. When credit to the private sector is limited, and when confidence in the financial system remains insufficient, small and medium-sized enterprises (SMEs) become trapped between operating costs and difficulty accessing finance, which weakens expansion and innovation and reduces opportunities for creating stable jobs.
A Dysfunctional Labor Market And High Youth Unemployment
From a labor market perspective, reports highlight the expansion of the informal economy as a large but precarious employment sector. Informal jobs mean less protection, lower productivity, a limited tax base, and ultimately, a state that spends more to manage the consequences of unemployment rather than investing in preventing it. While public sector opportunities remain the most attractive, the state's capacity to absorb them is diminishing as wages inflate, leaving the youth gap open to increasingly complex social and economic possibilities.
Corruption And Governance: A Hidden Cost That Consumes The State
International reports treat corruption and governance as economic indicators, not merely ethical considerations. Corruption increases project costs, weakens competition, deters investment, and diverts public spending toward lower output at a higher cost. Simultaneously, poor governance undermines the ability of institutions to enforce fair and transparent rules, which directly impacts market confidence and capital willingness to invest.
Increased External Risks
Reports do not view Iraq as an isolated economy, but rather as a country that is quickly exposed to global shocks due to its dependence on oil. A slowdown in the global economy, geopolitical and trade instability, or changes in demand all translate into an immediate impact on revenues. And when domestic obligations are fixed and substantial, the margin for maneuver in the face of any revenue decline becomes very limited.
Water And Climate: The Danger That Became Economic
By 2025, the water issue had shifted from the realm of environmental concerns to that of economic ones. Water scarcity, agricultural decline, and internal migration are placing long-term pressure on cities, services, and the labor market, presenting the state with a costly dilemma: either significant investments in adaptation and resource management, or accumulating social and economic costs year after year. With the increasing complexity of the water situation in upstream countries, water has become a source of both external and internal pressure simultaneously.
2025 Summary: Improvement Is Reversible If Reforms Remain Delayed
The recurring theme in international reports is that improved revenues alone do not build resilience. If a country remains dependent on oil, consumes most of its resources on current expenditures, leaves the private sector without adequate funding and a clear competitive environment, and faces water scarcity as a recurring shock, then any oil, political, or security shock will push the economy back into a state of tension.
According to economist Ziad al-Hashemi , international reports during 2025 do not speak of a temporary crisis, but rather of structural risks in the Iraqi economic model, and that any improvement in revenues will remain fragile and susceptible to reversal with the first oil, political or security shock unless deep economic reforms are implemented.
Source: Baghdad Today + X website + Agencies https://baghdadtoday.news/289543-2025.html
The Numbers Are Reassuring... But Are The Reserves Sufficient To Protect The Dinar?… The Shocking Truth: The Danger Lies Not In The Market, But In The State Itself.
Baghdad Today – Baghdad While the parallel market is testing the limits of monetary policy, the Prime Minister's financial advisor, Mazhar Muhammad Salih , offered explicit reassurance: the official exchange rate will remain at 1,320 dinars, and the recent fluctuations are merely "short-term noise." But behind this apparent calm lies a larger question concerning the state's ability to bolster its resources without jeopardizing monetary stability.
Economist Ahmed Abdel Rabbo interprets Saleh’s statements as part of a broader strategy; in his view, price stability is not merely a financial option but a political signal that the incoming government will not approach adjusting the exchange rate in its first year, in recognition of the magnitude of the inflationary impact that any step in this direction could have.
Abdel Rabbo tells Baghdad Today that the real challenge lies not in the exchange rate but in the revenue structure itself. He explains that Iraq loses billions of dollars annually through weak customs procedures, a paper-based tax system, and massive import flows that keep the demand for dollars high.
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In his view, increasing revenue requires less of a change in the exchange rate and more of a complete customs reform, a shift to electronic tax collection, and linking tax databases to foreign trade, banks, and border crossings.
What Abdel Rabbo points out aligns with part of Mazhar Saleh's vision: strong foreign reserves provide cover for the official exchange rate, and inflation, which has fallen to 2.5%, reflects the success of monetary policy in stabilizing prices. However, without addressing the loopholes in tax collection, evasion, and invoice manipulation, the parallel market will remain capable of generating speculative waves whenever a rumor or incomplete information emerges.
Abdel Rabbo also believes that part of the pressure on the dollar is a result of an economic structure that relies on consumer imports, which makes supporting agriculture, food industries, building materials and medicines not only a development option, but also an indirect monetary policy that reduces the need for the dollar and improves the balance of payments.
In light of this scenario, the equation for stability seems clear: protecting the dinar is not achieved by changing the price, but by reforming the economy from the bottom up.
What Saleh said about the stability of the reserves provides the necessary cover, but what Abd Rabbo is proposing represents the long road that cannot be avoided if the state wants a stable exchange rate that is not shaken by "temporary noise". Source: Baghdad Today + Agencies https://baghdadtoday.news/288554-.html
Central Bank Reserves: Gold Rises, Investments Decline By 5 Trillion Dinars
Source: Alsumaria News 1,229 views Alsumaria News– The economist revealed the economy, Nabil Al-Marsoumi On Sunday, details emerged regarding the latest official data on foreign reserves.
Central Bank of Iraq He confirmed that it had reached levels close to $98.2 billion.
Al-Marsoumi stated in a blog post on his social media account that the foreign reserves of Central Bank of Iraq As of September 30, 2025, it reached $98.155 billion,” based on official figures.
He explained that the total figure mentioned is equivalent to 127.601 trillion dinars, distributed as follows: "Gold 27.552 trillion dinars, investments 98.308 trillion dinars, and cash reserves at the Central Bank 1.741 trillion dinars."
The economist pointed out that "compared to the end of last April, gold reserves increased by approximately 5 trillion dinars, while investments decreased by more than 5 trillion dinars during the same period."
Regarding investments, Al-Marsoumi said they "include investments in US Treasury bonds, British bonds, bonds of other countries, and the purchase of sukuk (Islamic bonds)."Development Bank Islamic investment involves placing deposits in various banks, which are highly liquid and low-risk investments. LINK
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