Sunday Iraq News Posted by Tishwash at TNT 6-14-2026

TNT:

Tishwash:  Standard & Poor's affirms Iraq's sovereign rating and removes it from negative watch.

Standard & Poor's Global Ratings affirmed Iraq's sovereign rating at "B-/B" and removed the long-term rating from its negative watch list.

The agency gave a negative outlook, citing the risks of conflict in the Middle East over the next six to twelve months, including continued disruptions to export trade routes through the Strait of Hormuz and the potential for damage to infrastructure.

Iraq’s economy remains heavily dependent on the oil sector, which means it is suffering greatly from the decline in crude exports through the strategic waterway, according to Reuters.

The agency predicted that oil production would average 2.9 million barrels per day for the entire year in 2026, down about 28% from the pre-war average of 4 million barrels per day recorded in 2025, attributing its forecast to current production levels and the fragile recovery expected in the second half.

The agency said that given that oil flows constitute more than 90% of budget revenues and merchandise exports, Iraq’s financial situation and balance of payments are likely to remain under pressure this year, forecasting a 15% contraction in real GDP this year.

Higher average oil prices during 2026 would provide some support for fiscal and external revenues, assuming oil exports gradually recover in the second half, which Standard & Poor's said remains its baseline scenario.

The agency had placed Iraq’s long-term sovereign rating of “B-” on negative watch in March, citing the risk of a downgrade following a sharp drop in oil production linked to escalating conflict in the region.  link

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Tishwash:  The Development Fund: Will Al-Zaidi succeed in creating a new financing arm for Iraq?

Al-Mada/Mohammed Al-Obeidi:

The government's move to establish a "Development Fund" in Iraq is sparking widespread debate in economic and financial circles, given the country's financial crisis and the general budget's heavy reliance on oil revenues. While the government sees the project as an opportunity to attract investments and stimulate economic growth, experts are raising questions about its launch timing, funding mechanisms, and its ability to achieve its objectives under current financial pressures.

This move coincides with political and economic initiatives led by Prime Minister Ali Faleh Al-Zubaidi, who is seeking to garner domestic and international support for the fund as an investment platform aimed at financing infrastructure projects, creating jobs, and diversifying sources of economic growth away from traditional dependence on oil.

 Government officials have spoken of international contributions and guarantees that could reach between $100 and $150 billion, in addition to hopes of attracting further investments and partnerships in the coming phase.

Regarding the Washington visit , financial and banking researcher Haider Al-Sheikh told Al-Mada that "the Development Fund is an investment fund based on contributions from foreign and Arab companies, and the government has set a minimum capital of $100 billion."

He added that “the Prime Minister’s upcoming visit to the United States could contribute to enhancing the project’s chances of success, particularly through meetings with representatives of American and foreign companies and inviting them to invest in Iraq.” He explained that “the entry of American companies could pave the way for more Arab and foreign companies to participate in investment projects through the Development Fund.”

Sheikh clarified that “the project is inherently investment-oriented, and the government’s role is to create a suitable environment for investors and enable them to implement projects, thereby contributing to stimulating the economy and expanding the investment base.” He pointed out that “the Fund is not primarily focused on direct operational spending, but rather aims to attract capital to productive and developmental projects.”

The idea of ​​establishing a sovereign wealth fund or a development fund is not new to Iraq. In recent years, successive governments have proposed similar initiatives and ideas aimed at investing oil wealth, diversifying income sources, and promoting long-term investments.

However, most of these projects remained within the realm of official pronouncements and declarations, failing to materialize into effective institutions on the ground. This was due to challenges related to financial crises, mismanagement, fluctuating oil prices, high operating costs, and political and administrative disputes. Regarding the timing dilemma, economist Dirgham Muhammad believes that "the establishment of development funds or sovereign wealth funds is usually linked to the existence of financial surpluses after covering the needs of the general budget."

He added to Al-Mada that "the situation might be different if the funds are in the form of grants rather than loans," explaining that "grants allocated to sovereign wealth funds are conditional on directing them towards investment and developing investment portfolios with guaranteed returns, and not using them to finance operating expenses."

Experts point out that the success of any development fund of this size hinges on the nature of its funding sources, legal guarantees, governance, and management mechanisms, as well as the state's ability to provide a stable investment environment that attracts and retains  capital. This comes at a time when Iraq faces challenges related to the budget deficit, fluctuating oil prices, and the need for structural  reforms in economic management.

These proposals are made as the government has announced that the development fund will be an investment vehicle independent of the general budget, relying on international contributions and guarantees aimed at achieving economic stability through investment. This will be done in conjunction with efforts to reform financial management and adopt a program-based budget in coordination with international bodies and local institutions.  link

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Tishwash:  A strategic move: ExxonMobil opens the door to massive investments in Iraqi oil.

 Baghdad/Al-Masalla Translation: ExxonMobil executives met with the new Iraqi Oil Minister, Basim Khudair.

The American giant had signed a preliminary agreement last year to develop the Majnoon field, which has a production capacity of 450,000 barrels per day, in addition to exploring the development of infrastructure for Iraq’s oil exports.

Since taking office last month, Khodair has called on American companies to resume trade talks that had begun under the previous government.

According to informed sources, the meeting took place in Baghdad on June 7, where the two sides discussed ways to expedite the implementation of the preliminary, non-binding agreement signed in October 2025 with the Basra Oil Company and the Iraqi State Oil Marketing Organization (SOMO). The agreement focuses on developing the giant Majnoon oil field, which holds estimated reserves of approximately 38 billion barrels, with the potential for a significant increase in production in subsequent phases.

The Majnoon oil field, one of the world's largest, is located in Basra Governorate in southern Iraq. The partnership aims to utilize cutting-edge technologies to improve recovery rates and reduce associated gas flaring, as well as upgrade export infrastructure including ports, pipelines, and storage facilities, and potentially explore joint marketing opportunities in Asian markets.

These talks come as part of a wave of major American companies returning to Iraq, such as Chevron, which is holding exclusive talks for the West Qurna 2 field, as part of the government's efforts to modernize the oil sector and offer more attractive investment terms.

The importance of strengthening cooperation for the Iraqi economy

Strengthening the partnership with ExxonMobil represents a vital strategic step for the Iraqi economy, which relies on oil for over 90% of its budget revenues. Iraq aims to increase its oil production to 6 million barrels per day by 2029, compared to approximately 4 million barrels currently, and the development of fields like Majnoon, through investments of billions of dollars, will contribute to achieving this goal.

This cooperation also helps modernize export infrastructure, reducing operational losses, increasing export capacity, and opening new markets. It brings advanced American technical expertise to improve production efficiency, develop associated gas for power generation, and reduce environmental emissions, thus supporting long-term economic diversification.

For its part, ExxonMobil sees Iraq as an opportunity to access large, inexpensive oil reserves, thus bolstering its global portfolio. Analysts emphasize that such agreements have both political and economic dimensions, as they strengthen Iraq's geopolitical balance and attract Western investments that contribute to stability and economic growth.

Negotiations are ongoing to transform the initial agreements into binding contracts, with a focus on ensuring mutually beneficial returns amidst security and administrative challenges. This cooperation is seen as part of a broader strategy to rebuild Iraq's energy sector and strengthen its position in the global market.  link

Tishwash:  Program budgeting in Iraq: Financial reform or a restructuring of the public spending system?

Iraq's move towards program budgeting reveals an attempt to rebuild the philosophy of public finance management by linking spending to results and objectives instead of the traditional distribution of allocations.

This trend comes at a time when the region is facing accelerating economic and regional challenges that require governments to adopt more flexible policies in managing resources, as Baghdad affirms that it continues to work on protecting financial stability and ensuring the financing of basic obligations, in parallel with preparing visions for future budgets that are compatible with local and international changes.

Finance Minister Faleh Sari announced during his talks with the US Chargé d'Affaires in Baghdad a government plan to prepare a program budget and gradually move away from the traditional system, which would raise the efficiency of spending and link allocations to performance and results, within the framework of a reform vision that enjoys the support of international institutions and seeks to develop the state’s financial management.

careful study

In this context, MP Hussein Al-Khafaji, a member of the Parliamentary Finance Committee, revealed that “the Finance Committee will discuss with the relevant executive authorities the various indicators and data related to the financial situation, in order to ensure that decisions are made based on accurate information and a comprehensive vision.”

He then explained that “there are important files related to strategic projects, contracts and government commitments that need careful study in order to maintain the continuity of work and serve the public interest.”

He added that “the upcoming meetings will provide a clearer picture of the financial path during the next stage, especially in light of the current economic conditions, which will help to formulate a realistic vision regarding the budget and government spending.”

Measuring results and achieving goals instead of simply distributing financial allocations

Observers believe that adopting a program budget represents a qualitative shift in public finance management, as it focuses on measuring results and achieving goals instead of merely distributing financial allocations. This contributes to raising the efficiency of government institutions, reducing waste, improving spending priorities, and enhancing transparency in the implementation of development projects and plans.

Experts also point out that the continued coordination between the government, the parliamentary finance committee and the central bank reflects the existence of an institutional path for managing the financial file, especially in light of the keenness to secure basic expenditures and protect economic stability, in parallel with reviewing spending priorities and developing financial planning tools to keep pace with current changes.

While technical discussions on the upcoming budget continue, the government appears to be moving forward with adopting structural reforms aimed at modernizing financial management, improving the efficiency of resource use, and creating a more sustainable environment for public spending, in order to ensure the continued implementation of vital projects, support basic services, and enhance confidence in the national economy during the next phase.  link

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Tishwash: How is the economy being managed? Iraq is without a budget for the fourth time since 2003.

Iraq is entering an unprecedented financial phase, with increasing indications that the federal budget for 2026 will not be approved, at a time when the country is facing double pressures represented by the decline in oil revenues and the continuation of regional turmoil that has affected the movement of oil exports, which puts the government before the challenge of managing the economy through temporary spending rules for the fourth time since 2003.

Iraq is almost entirely dependent on oil revenues, which constitute more than 90% of public revenues, while public finances are facing increasing pressure after the failure to approve spending and revenue schedules, amid fears of the repercussions of this on investment projects, infrastructure, job opportunities and economic growth.

 temporary spending

In this context, the financial advisor to the Prime Minister, Mazhar Muhammad Saleh, says that the financial policy during the year 2026 is still managed in accordance with the provisions of the Federal Financial Management Law No. 6 of 2019, especially Article 13, which allows spending at a rate of (1/12) per month of the expenses of the previous year in the event of a delay in approving the budget.

Saleh explained to Shafaq News Agency that this mechanism "enabled the continuity of public spending, especially salaries, wages, pensions and social welfare, in addition to financing basic investment expenditures and ongoing projects according to completion rates and available liquidity."

But Saleh acknowledges that public finances are facing increasing pressure as a result of geopolitical developments and fluctuations in global energy markets, which has impacted oil revenues as the main source of funding for the public treasury.

He indicates that the government is currently moving towards preparing the 2027 budget within a reform framework that focuses on the efficiency of public spending, rationalizing operational expenses, protecting social programs, and giving priority to economically viable projects, as well as diversifying revenues and promoting digital transformation and administrative reform.

This comes after about 16 months of no budget schedules being approved, at a time when the three-year budget for the years 2023, 2024 and 2025 represented the last integrated financial framework for government spending before it effectively ended at the end of 2025.

Suspended projects and postponed development

 For his part, economist Diaa Al-Mohsen believes that the greatest impact of the absence of a budget will fall on investment spending, because the budget is not just a financial document, but a tool for managing the state’s economic and investment activity.

Al-Muhsin tells Shafaq News Agency that the absence of a budget practically means difficulty in launching new development projects or expanding infrastructure projects, including roads, bridges, schools, hospitals, electricity and water networks, as well as delays in government contracts.

He adds that ministries and governorates will gradually lose the ability to plan in the medium and long term, while the contribution of government spending to stimulating economic activity will decline, which will directly affect the contracting, industry, transport and services sectors.

These concerns coincide with previous parliamentary data that spoke of more than 4,500 stalled projects across Iraq, some of which have been halted for years, at a time when experts believe that the absence of a budget will add new projects to the long list of stalled projects.

Recruitment under pressure

The impact of the lack of a budget is not limited to investment projects, but extends to the government employment file, which represents one of the most prominent outlets for absorbing graduates in Iraq.

Al-Muhsin confirms that appointment opportunities will be very limited, with exceptions likely to be restricted to specific sectors such as health, education, and security services, warning that this will lead to increased social pressures in light of rising unemployment rates among young people.

For his part, economic researcher Ahmed Eid says that spending according to the (1/12) rule ensures the continuation of salaries and basic services, but it does not provide the necessary flexibility to launch new projects or expand investment spending.

Eid adds to Shafaq News Agency that the absence of a budget imposes a state of financial uncertainty and limits the government’s ability to implement its economic plans efficiently. It also negatively affects companies contracted with the state and local and foreign investors due to the lack of a clear vision for future projects.

Accumulating risks

Experts believe that the absence of a budget presents a financial paradox. On the one hand, it leads to a decline in investment spending, which may reduce the financial deficit in the short term, but on the other hand, it weakens economic growth and leads to a decline in non-oil revenues related to economic activity.

Al-Muhsin explains that the deficit may improve numerically as a result of lower capital expenditures, but the economy will pay the price later through a decrease in productive capacity, a decline in job opportunities, and the continued dominance of operating spending at the expense of productive investment.

This comes at a time when public finances are facing additional challenges related to declining oil exports and regional market turmoil, which increases the likelihood of resorting to domestic borrowing to finance essential expenditures.

difficult economic situation

 Financial expert Mahmoud Dagher believes that the absence of a 2026 budget is different from previous cases witnessed by Iraq, explaining that the House of Representatives did not approve the spending and revenue schedules during 2025, which is an issue he describes as having great technical and legal importance when applying the (1/12) rule.

Dagher told Shafaq News Agency that the country is currently going through "the most difficult economic situation," adding that talking about appointments or expanding spending seems difficult at the present stage, because the priority is focused on securing salaries and some governing expenses by financing the deficit through the Central Bank.

He emphasizes that the main challenge is no longer achieving rapid economic growth, but rather reaching the highest levels of efficiency in spending and controlling expenditures to protect foreign reserves, which represent the primary line of defense for the stability of the Iraqi dinar and the financing of imports.

 Public debt and borrowing

 Concerns are growing about the impact of the absence of a budget on public debt levels, especially with continued pressure on oil revenues.

In this regard, Ahmed Eid says that the government may be forced to expand its domestic financing tools through levies, taxes and borrowing from local banks, warning that this path raises financial risks in the medium term if it is not accompanied by real reforms to control spending and enhance non-oil revenues.

These concerns are consistent with previous warnings issued by economic experts regarding the widening gap between revenues and expenditures, in light of the rise in domestic debt during the past months and the government's reliance on exceptional financing tools to cover its basic obligations.

Managing the economy without a budget

In theory, experts say the government can manage the country through temporary spending rules, but with limited efficiency.

Al-Muhsin asserts that these rules allow for the payment of salaries, the continuation of public services, and the financing of some ongoing projects, but they do not provide an effective framework for managing economic development, because investment decisions become restricted and economic planning loses its clarity, while investors and governorates face an increasing state of uncertainty.

He summarizes the matter by saying: "The state can be managed, but development is difficult to manage."

In contrast, economist Safwan Qusay calls for finding alternative sources of funding for investment projects outside the framework of the traditional budget.

Qusay tells Shafaq News Agency that continuing to spend according to the (1/12) rule is practically limited to operational expenses, which requires finding special mechanisms to finance investment projects through borrowing laws or partnerships with the private sector and investors.

 It is proposed to expand the role of investment portfolios and investment bodies by offering infrastructure and service projects to investors in exchange for investment opportunities in the commercial, tourism and real estate sectors, in order to ensure the continuity of project funding and prevent its interruption.  link