Iraq Economic News and Points To Ponder Late Thursday Evening 8-20-26
Independent Sources Reveal: Iraq's 2027 Budget Is Set At 200 Trillion Dinars, With The Exchange Rate Fixed At 1320.
August 20, 2026Last updated: August 20, 2026 Al-Mustaqilla - According to informed sources speaking to Al-Mustaqilla on Thursday, the Iraqi government is moving towards adopting a dollar exchange rate of 1320 Iraqi dinars within the 2027 budget project, with no current intention to change the adopted exchange rate.
According to the sources, the new budget project is being prepared based on the current exchange rate, in a move that reflects the government’s commitment to the policy of stabilizing the dinar’s exchange rate and not introducing sudden changes to the market during the next stage.
Information indicates that the size of Iraq’s budget for 2027 may reach about 200 trillion Iraqi dinars, which, if adopted at this size, would be one of the largest budgets in Iraq’s history since 2003, in light of the high volume of government spending and the increasing financial obligations of the state.
According to sources, the government is working on finalizing the draft budget, in preparation for completing it and sending it to the House of Representatives in the coming period, after which the process of discussion, amendments and voting on it will begin.
The Iraqi public is awaiting the 2027 budget proposal, especially regarding the exchange rate, spending volume, salaries, investment projects, and the mechanism for financing the deficit, at a time when public finances are facing challenges related to oil prices and non-oil revenues.
If the exchange rate remains stable at 1320 dinars to the dollar, this means that the government will continue to base its financial estimates on the current official rate, and will not adopt a change in the value of the dinar within next year’s budget, according to the data reported by the sources.
This information remains linked to the draft budget before its final approval, as the figures and details may undergo modifications during the government review and discussion phases within the House of Representatives
https://mustaqila.com/المستقلة-تكشف-موازنة-العراق-2027-عند-200-تري/ a
Removing Zeros: A Currency Restructuring Or A Step To Boost Confidence In The Dinar?
Baghdad: Anwar Ayed The issue of removing zeros from the Iraqi currency has resurfaced, amid economic debate about the feasibility of this step and its implications for the value of the dinar and the purchasing power of the citizen, as well as the readiness of the banking and financial sectors to implement it.
Economic experts believe that removing zeros, if implemented within a comprehensive study and a clear plan, could contribute to restructuring the currency and simplifying financial and banking transactions, while emphasizing that the measure itself does not mean an increase or decrease in the purchasing power of the dinar, as long as prices, salaries and savings are transformed at the same rate.
Strengthening The Value Of The Dinar
Economic expert Haider Al-Sheikh told Al-Sabah newspaper: “Changing the Iraqi currency and removing zeros will enhance the value of the Iraqi dinar against foreign currencies,” explaining that “changing the currency will contribute to reviving the economy and providing cash liquidity to the government.”
The sheikh explained that the currency change process, according to the study, requires several months to print specific denominations in batches, in preparation for replacing them with the current currency. He pointed out that this process could contribute to strengthening the balances of government and private banks in Iraqi dinars and providing liquidity.
The Necessary Cash.
He added that another benefit of the process is “knowing the amount of currency held by the government and banks, as well as knowing the volume of currency circulating in the market.”
The sheikh pointed out that Iraq, after 2003, printed more than 100 trillion dinars, indicating that about 70 percent of the printed cash is outside the government's control and stored in homes.
And it is traded on the market.
Renaming The Monetary Unit
For his part, economist Mustafa Faraj said that "removing zeros from the Iraqi currency, if implemented according to a comprehensive study and plan, represents a positive step towards restructuring the currency and simplifying financial and banking transactions," stressing that "the process itself does not necessarily mean an increase or decrease in value."
The Purchasing Power Of The Dinar.
Faraj explained that removing three zeros, for example, means changing prices, salaries, and balances by the same percentage, and therefore the citizen's purchasing power does not change as a result of the removal alone.
He added that the main economic benefit is “reducing the volume of circulating figures, facilitating accounting and banking operations, supporting electronic payment systems, and making dealing in dinars more efficient and transparent,” stressing that the success of the step is linked to monetary stability, price control, and broad public awareness.
He explained that removing zeros could be part of a “broader monetary and banking reform package that enhances confidence in the dinar and supports economic stability.”
It is not a single, formal procedure.
Risks Of The Conversion Phase
In contrast, economic researcher Ahmed Eid warned that the most prominent risks that may accompany the removal of zeros are not related to the accounting removal process itself, but rather to the conversion phase and what may accompany it in terms of confusion in the markets and exploitation by some traders, especially in rounding prices upwards.
He explained that goods with small prices may be more likely to increase when converted to the new monetary unit, which, if this is repeated on a large scale, may lead to citizens feeling an actual increase in the cost of living, even though the process of removing zeros is theoretically supposed not to change purchasing power.
Eid pointed to other risks, including the weak financial literacy of some citizens, particularly with regard to converting cash savings, pricing goods and services, contracts and debts, as well as the possibility of speculation and rumors spreading about the value of the dinar.
He stressed that these risks become greater if the operation is carried out during an economic period suffering from financial pressures and problems related to liquidity and confidence.
Dual Pricing And Oversight
To protect the purchasing power of citizens, Eid called for the adoption of a sufficient transitional period preceding and accompanying the change process, during which dual pricing in the old and new dinars would be adopted, and precise rules would be put in place to prevent arbitrary rounding of prices, in addition to tightening control over markets and implementing a broad awareness campaign.
He stressed the need for the central bank to ensure that all bank accounts, savings, debts, salaries and contracts are converted in the same proportion, with the new currency being made available in an organized manner, and a period of simultaneous circulation of the two currencies being maintained.
He stressed that “the most important thing is that the removal of zeros should be preceded by real financial and monetary stability,” explaining that protecting purchasing power is not achieved by changing the form of the currency, but rather by controlling inflation, stabilizing the exchange rate and addressing financial and economic imbalances.
Removing zeros: A currency restructuring or a step to boost confidence in the dinar?
https://iqdnews.substack.com/p/removing-zeros-a-currency-restructuring
Iraq Wants To Delete Zeros From The Dinar But Will This Help Its Economy?
The National News Iraq is again considering a long-standing and controversial plan to delete zeros from the dinar as the country struggles with a deepening budget squeeze. The latest discussions revive an issue debated in Iraq for more than two decades.
The proposal was first floated during the tenure of former US civil administrator Paul Bremer in 2003 and has repeatedly resurfaced without being implemented. This time, the debate comes as Baghdad's budget squeeze is worsened by the closure of the Strait of Hormuz, disrupting Iraq’s main oil export route. https://www.youtube.com/watch?v=en8uMoy6SYs
Finance Minister Orders Acceleration of Iraq's First Program and Performance Budget
Mohammed Jangadost
At a Glance:
Finance Minister Faleh Sari reviewed preparation for the upcoming draft federal budget under a program and performance model.
Sari instructed the Budget Department to finalize draft allocations within specified deadlines and realistic fiscal estimates.
The transition moves Iraq away from traditional line-item budgeting to link resources directly to strategic outcomes.
The ministry aims to maximize spending efficiency amid broader fiscal pressures affecting the country.
Iraqi Minister of Finance Faleh Sari visited the Ministry of Finance's Budget Department to inspect ongoing work on the country's upcoming federal draft budget. During the review, Sari instructed officials to adhere strictly to completion schedules while implementing a program and performance budgeting framework designed to overhaul public expenditure management.
Key Statements and Focus Area:
Transitioning Fiscal Strategy:"The Ministry is moving toward a gradual transition from line-item budgeting to program and performance budgeting. This approach links resource allocation directly to objectives, programs, and outcomes, thereby enhancing the efficiency of public expenditure management." — Faleh Sari, Iraqi Minister of Finance.
Methodological Discipline:"Completing the draft budget within specified deadlines requires finalizing its requirements according to a precise methodology and realistic estimates to ensure it serves targeted national results." — Ministry of Finance press release.
Shift to Program and Performance Methodology
The Ministry of Finance is phasing out the traditional line-item framework, which historically focused on administrative inputs, in favor of a system that allocates funds based on measurable project deliverables. The new model ties operational and investment outlays directly to sectoral goals, providing clearer oversight over public spending efficiency.
Enforcing Preparation Deadlines
Minister Sari urged department leads to maintain momentum to meet structural deadlines for the upcoming budget cycle. He emphasized that precise revenue and cost estimations are critical to making the new budgeting model functional and sustainable for state institutions.
FYI
The adoption of a program and performance budget reflects an effort to modernize public financial management in Iraq.
Amid volatile energy revenues and structural fiscal pressures, linking state outlays to performance benchmarks allows authorities to prioritize essential infrastructure, improve transparency, and restrict wasteful administrative spending across government ministries. https://channel8.com/english/news/64159