Iraq Economic News and Points To Ponder Wednesday Evening 1-21-26

Iraq Can Fund Salaries, But Oil Sets The Limits

2026-01-21 Shafaq News   Iraq is not expected to face immediate difficulties in paying public-sector salaries or pensions in early 2026, according to government advisers and economists. However, continued payments remain closely linked to oil prices staying within a limited range, leaving public finances vulnerable to external market shifts.

Oil revenues account for more than 90% of Iraq’s state income, making fiscal stability highly sensitive to fluctuations in global crude prices. Monthly operational spending —primarily salaries, pensions, and social welfare— absorbs the bulk of government expenditures, reducing flexibility in the event of a downturn.

The Prime Minister’s financial adviser, Mudhhir Mohammed Saleh, said that Iraq’s fixed monthly obligations amount to approximately 8 trillion Iraqi dinars (around $6.1 billion), excluding subsidies, debt servicing, and outstanding contractual payments.

 In comments to Shafaq News, he noted that oil revenues can cover these commitments provided the annual average oil price remains above $60 per barrel, assuming exports of about 3.4 million barrels per day.

*Economists caution that this benchmark reflects structural fragility rather than financial resilience.* Ahmed Abd Rabbo, an economic analyst, said salary payments may remain secure in the short term but warned that the underlying imbalance persists.

He pointed to the steady expansion of the public wage and pension bill over the past decade, alongside limited growth in non-oil revenues. “The issue is not an immediate inability to pay,” he said, “but prolonged exposure to oil-market volatility without sufficient reform.”

Official data highlight the scale of the challenge. The Eco Iraq Observatory reported that Iraq’s fiscal deficit reached 24.68 trillion dinars (about $18.8B) by October 2025. Current expenditures accounted for roughly 75% of total spending, while non-oil revenues totaled less than 10 trillion dinars, compared with oil revenues of nearly 93 trillion dinars during the same period.

Central Bank figures further show that salaries and service-related spending reached about 96 trillion dinars, representing close to 90% of overall expenditure, leaving limited room to absorb revenue shocks or expand investment.

Nawar al-Saadi, a professor of international economics, said the main concern is the absence of a stabilizing mechanism. “Oil revenues are sufficient to fund current spending,” he told Shafaq News, “but they are not being channeled into economic diversification or a functioning stabilization fund. Any sudden price decline or unplanned obligation immediately turns salaries into a sensitive financial and political issue.”

Another economist, Mustafa al-Faraj, estimated that salary payments remain manageable if oil prices stay above $55 per barrel, warning that sustained prices below that level would impose significant constraints unless spending is adjusted.

He argued that reforms should focus on expenditure discipline, including reviewing high-level salaries, addressing duplicate salary payments, and reassessing legacy compensation schemes, alongside efforts to activate non-oil sectors such as tourism.

The government of Prime Minister Mohammed Shia al-Sudani, whose term has recently ended, introduced limited deficit-control measures, including the sale of unused government vehicles and equipment, a 50% reduction in fuel allocations, and a freeze on recognizing additional academic degrees for salary and promotion purposes from January 2026.

Economists say that while these measures may save about $2 billion annually, and ease pressure in the short term, they remain modest relative to the overall deficit. Without broader structural reforms targeting spending rigidity and revenue diversification, Iraq’s ability to sustain salary payments will continue to depend largely on favorable oil market conditions.https://www.shafaq.com/en/Report/Iraq-can-fund-salaries-but-oil-sets-the-limits

Iraq Imports Exceed $17B In Q3 2025

2026-01-21 Shafaq News– Baghdad  Iraq’s imports reached $17.929 billion in the third quarter of 2025, up from $17.534 billion in the second quarter, Trading Economics said on Wednesday.

According to the data, machinery and transport equipment accounted for 38% of imports, followed by manufactured goods at 27%, mineral fuels at 10%, and chemicals and related products at 7%.

Syria ranked as Iraq’s largest import partner, accounting for 18%, followed by China with 14% and the United States with 6%. Other key partners included South Korea, Jordan, Germany, and India.

Iraq’s average imports between 1988 and 2025 stood at $13.478 billion. Figures peaked at a record $50.155 billion in the fourth quarter of 2012, while the lowest level was recorded at $2.681 billion in the fourth quarter of 1994.  Iraq’s Central Bank announced last month that imports from January to September 2025 totaled $63.093 billion.   https://www.shafaq.com/en/Economy/Iraq-imports-exceed-17B-in-Q3-2025

Iraq Climbs To Fourth Among Turkiye’s House Buyers In December 2025

Economy & Business   2026-01-21 Shafaq News– Ankara   Iraqis purchased 133 houses in Turkiye in December 2025, ranking fourth among foreign buyers of real estate, the Turkish Statistical Institute (TURKSTAT) said on Wednesday.

Total home sales across Turkiye rose by 19.8 percent in December compared with the same month last year, reaching 254,777 units.

Sales to foreign nationals increased by 5.1 percent year-on-year to 2,541 homes, accounting for 1.0 percent of total property sales during the month. Russians topped the list of foreign buyers with 504 homes, followed by Iranians with 232 and Ukrainians with 193. Azerbaijan ranked fifth with 113 homes, followed by Germany with 105, Kazakhstan 92, Saudi Arabia with 74, Afghanistan and China recorded 71 houses.

Last month, data showed that Iraqis bought 104 houses and took fifth place in November 2025. Iraqis had led foreign property purchases in Turkiye for several years, starting in 2015, but slipped to second place behind Iran at the beginning of 2021. Their ranking dropped further to third in April 2022 following a surge in Russian purchases. https://www.shafaq.com/en/Economy/Iraq-climbs-to-fourth-among-Turkiye-s-house-buyers-in-December-2025

USD/IQD Exchange Rates Climb In Baghdad, Dip In Erbil

Economy & Business  Iraq   2026-01-21 Shafaq News– Baghdad/ Erbil  The US dollar exchange rates closed higher in Baghdad but lower in Erbil on Wednesday, widening the gap between the two markets by 250 Iraqi dinars by the end of trading.

According to a Shafaq News market survey, the dollar rose in Baghdad’s Al-Kifah and Al-Harithiya central exchanges to 148,200 dinars per 100 dollars, up from 148,000 dinars earlier in the day.

Local exchange shops in the capital sold the dollar at 148,750 dinars per 100 dollars, while buying prices stood at 147,750 dinars.   In Erbil, the selling price fell to 147,950 dinars per 100 dollars and the buying price to 147,850 dinars.  https://www.shafaq.com/en/Economy/USD-IQD-exchange-rates-climb-in-Baghdad-dip-in-Erbil-1