Economists are sounding the alarm over Iraq’s financial stability, citing a steep decline in global oil prices and new US tariffs as major threats to state revenues, potentially jeopardizing public sector salaries. Brent crude has dropped to $65 per barrel and US crude to $62, driven by heightened OPEC+ output and President Donald Trump’s broad tariffs on imported goods.
Hilal Al-Taan, an economist speaking to Shafaq News, emphasized that oil accounts for 93% of Iraq’s budget, making it highly vulnerable to price shocks. He called for urgent diversification, urging the government to bolster agriculture and industry to curb imports and preserve foreign currency reserves. Al-Taan also recommended tackling inefficiencies by eliminating “ghost employees” from payrolls and slashing wasteful spending. He suggested internal borrowing from banks or the central bank as a stopgap, but warned that external loans might be inevitable if the shortfall persists, risking a return to heavy debt.
Mudhir Saleh, financial adviser to Prime Minister Mohammed Al-Sudani, noted that salaries consume roughly 65% of Iraq’s budget, with annual wage costs totaling approximately 62 trillion dinars ($47.3 billion). He cautioned that Trump’s tariffs, aimed at curbing US inflation, could spark a global recession, further depressing oil demand and prices. While Iraq can sustain salaries with oil prices between $50 and $55 per barrel, Saleh warned that a drop below this threshold would strain finances, stalling critical investment projects and pushing the country toward a crisis.
