Iraq Economic News and Points To Ponder Saturday Morning 8-8-26
80% Of Money Is Outside Banks... Former Mp Calls For A New Strategy To Attract Hoarded Funds
Information/Baghdad... Former MP Abbas Sarout confirmed on Thursday that 80% of Iraqi money is hoarded in homes, away from banks, noting the need to reconsider the strategy for attracting funds to the banking system.
Sarout explained to Al-Maalouma that "Iraq is suffering from a liquidity crisis that has begun to affect salary distribution, given that 80% of the money is hoarded outside banks.
This requires serious attention to adopt a strategy that creates incentives to encourage citizens from all walks of life to deposit their money in banks and adopt electronic payment methods, a strategy used in most countries worldwide."
He added that "this mechanism ensures the government's ability to distribute salaries, grant loans and advances, and conduct financial transactions," pointing out that "the majority of financial transactions in Iraq still rely on traditional methods, and this has many drawbacks."
He stressed "the necessity of citizens having confidence to deposit their money in banks, as this will create balance, sustain the flow of funds, and foster greater flexibility, particularly in ensuring the financial capacity to meet obligations." End/25
Iraq Moves To Cover 13 Trillion Dinar Deficit
Shanya Salar
At a Glance
Deficit reaches 13 trillion IQD
Revenues fall short of spending
50 trillion IQD needed by year-end
Oil exports and reserves under review
Information obtained by Channel8 indicates that Iraq is facing a 13 trillion Iraqi dinar fiscal deficit during the first five months of the year, prompting the government to consider expanded oil exports, customs reforms, debt recovery, and the possible use of foreign currency reserves to cover its financial obligations.
Key Statements and Focus Area
Government spending reached more than 46 trillion IQD, compared with 33 trillion IQD in revenues during the first five months.
Iraq requires an additional 50 trillion IQD over the remaining five months to cover salaries and core operating expenses.
Authorities are targeting exports of up to 750,000 barrels per day through Ceyhan while increasing output from the Kirkuk fields.
Iraq holds approximately $93 billion in foreign currency reserves that could be used to absorb financial pressures.
Iraq recorded a fiscal deficit of approximately 13 trillion Iraqi dinars during the first five months of the year, as government expenditures exceeded revenues.
Public spending surpassed 46 trillion dinars, while total revenues reached around 33 trillion dinars, leaving a significant gap that Baghdad must address as it approaches the final five months of the year.
The government is estimated to require an additional 50 trillion dinars to maintain public-sector salaries and essential operating expenditures through the end of the year.
Baghdad is prioritizing increased crude exports as one of its main measures to strengthen state revenues.
Iraq is working toward exporting 750,000 barrels of crude oil per day through Turkey's Port of Ceyhan while also seeking to increase production from the Kirkuk oil fields.
To attract buyers and maintain market share, Iraq is offering discounts of between $27 and $30 per barrel on Basra Medium and Basra Heavy crude grades.
The government is also considering the Syrian route as an additional export channel.
Authorities are pursuing reforms at land and air border crossings to increase non-oil revenues and strengthen customs collection.
The government also intends to recover part of the approximately 64 trillion IQD in outstanding state advances and loans issued to citizens and companies.
These measures are intended to provide additional revenue without relying entirely on oil exports or new borrowing.
Iraq currently holds approximately $93 billion in foreign currency reserves, providing the government with a potential financial buffer during the current revenue shortfall.
Authorities could draw on the reserves to absorb part of the fiscal shock, similar to the approach taken in 2014, when reserves fell to approximately $38 billion as Iraq financed the war against ISIS.
The Iraqi Parliament is scheduled to hold an extraordinary session to discuss the country's financial situation and hear from the Minister of Finance.
The Parliamentary Finance Committee is also examining options, including external borrowing and the possibility of issuing additional currency.
Economic experts have warned that relying on new debt to finance recurring operational expenditures, particularly public-sector salaries, could create deeper structural problems for Iraq's finances.
FYI
Iraq's public finances remain heavily dependent on oil revenues, while salaries, pensions, and government operating costs account for a large share of recurring expenditure.
The current deficit has increased pressure on Baghdad to expand oil exports, strengthen non-oil revenue collection, recover outstanding state funds, and manage its foreign-currency reserves while avoiding financing recurring expenditures through unsustainable borrowing. https://channel8.com/english/news/63256
After Delays In Payment, A Member Of Parliament Proposes A "Virtual Currency" To Solve The Salary Crisis.
2026-08-07 Shafaq News - Baghdad On Friday, Saad Al-Awadi, the deputy head of the National Approach parliamentary bloc, proposed a plan to secure the salaries of employees and retirees through the "digital dinar" and end the "cash crisis" in Iraq.
In a statement received by Shafaq News Agency, MP Al-Awadi said that this initiative is "a comprehensive economic initiative to address the cash liquidity crisis and ensure the stability of salary payments for employees and retirees, through the launch of the (digital Iraqi dinar) and to facilitate access to financial entitlements for employees without the need to deal with paper money."
He explained that "the initiative aims directly to save employees from the repercussions of delayed salaries and liquidity bottlenecks in banks and disbursement outlets, by depositing the salary as a digital, encrypted, and protected currency in local financial wallets, which allows citizens to use their salaries immediately to purchase needs and make electronic payments without waiting for (cash) to be available."
Al-Awadi explained that “the current cash bottleneck is not due to a lack of resources, but rather to the hoarding and stockpiling of paper currency outside the banking system at record rates, stressing that reliance on the digital dinar approved by the Central Bank will eliminate salary delays, reduce operational costs for printing and transporting money, and provide protection for citizens’ purchasing power away from domestic borrowing policies.”
He added that "the proposed roadmap also includes obligating the service and commercial sectors to accept digital transactions, and providing incentive packages and government guarantees to restore confidence in the banking sector."
He called on the government, the central bank and the relevant parliamentary committees to hold an urgent joint session to develop the legislative and technical frameworks necessary for implementing the project.
It should be noted that Iraq still lacks official cash platforms or electronic trading systems, and the most famous and widespread digital currencies traded globally, Bitcoin, are still not adopted on the ground in buying, selling and cash transactions https://www.shafaq.com/ar/سیاسة/بعد-ت-خر-صرفها-نا-ب-يقترح-عملة-افتراضية-لحل-زمة-الرواتب
MP Proposes Digital Dinar To Fix Iraq's Cash Shortage
2026-08-07 / Shafaq News- Baghdad MP Saad al-Awadi, deputy head of the National Approach parliamentary bloc, proposed on Friday a plan to secure salary payments for state employees and retirees through a "digital dinar" and end Iraq's ongoing cash crisis.
In a statement, al-Awadi said the initiative represents “a comprehensive economic plan to address the liquidity crisis and ensure stable salary disbursement through the launch of a digital Iraqi dinar,” easing access to financial entitlements for employees without requiring paper cash transactions.
The plan aims directly to shield employees from the effects of salary delays and liquidity bottlenecks at banks and disbursement outlets, he explained, by depositing salaries as encrypted, protected digital currency into designated financial wallets, allowing citizens to immediately use their salaries for purchases and electronic payments without waiting for cash to become available.
“The current cash bottleneck does not stem from a lack of resources but from paper currency being withheld and hoarded outside the banking system at record rates,” al-Awadi stressed, adding that reliance on a central bank-issued digital dinar would eliminate salary delays, reduce the operational costs of printing and transporting cash, and protect citizens' purchasing power without resorting to domestic borrowing policies.
Read more: Iraq faces ‘cash-flow’ strain, not bankruptcy
His proposed roadmap also includes requiring service and commercial sectors to accept digital transactions, along with incentive packages and government guarantees to restore confidence in the banking sector.
Al-Awadi called on the government, the Central Bank, and the relevant parliamentary committees to hold an urgent joint session to establish the legislative and technical frameworks needed to implement the project.
Iraq still lacks official digital payment platforms or electronic trading systems, and globally circulated cryptocurrencies, most notably Bitcoin, the most widely used, remain unadopted in practice for buying, selling, and cash transactions in the country.
Read more: Delayed public salaries push Iraq’s Diyalafamilies into debt
https://www.shafaq.com/en/Iraq/MP-proposes-digital-dinar-to-fix-Iraq-s-cash-shortage