Iraq’s ambitious 2023–2025 budget, approved in June 2023, is the largest in its history at 198.9 trillion dinars ($153 billion) annually, aimed at boosting infrastructure, public sector salaries, and economic growth. The Kurdistan Region is slated to receive 12.67% of the funds, over $12 billion yearly, with oil revenues projected at 117 trillion dinars based on $70 per barrel. However, implementation has stumbled, turning the multi-year plan into disjointed annual efforts, hampered by delays and disputes.
Mudher Mohammed Saleh, financial adviser to Prime Minister Mohammed Shia Al-Sudani, insists the 2025 budget remains legally sound under Law No. 13 of 2023, with 90% of financial operations stable. Yet, slow fund disbursements have sparked worries. Parliament finance committee member Moein Al-Kadhimi warned that stalled budgets threaten market liquidity, businesses, and growth, projecting revenues at 140 trillion dinars ($107 billion) and urging a spending cap of 150 trillion dinars.
Iraq’s oil-dependent economy faces pressure as exports dropped to 3.2 million barrels per day from a projected 3.5 million, creating a 3 trillion dinar ($2.3 billion) shortfall amid volatile oil prices ($60–$80 per barrel). Analyst Ahmed al-Jassim stressed the need for careful expenditure management, while former Prime Minister Mustafa al-Kadhimi pushed for diversifying non-oil revenues—currently under 15 trillion dinars—to reach 30 trillion through taxes and fees. The 2025 budget anticipates a 64 trillion dinar ($48 billion) deficit, raising borrowing concerns.
Tensions between Baghdad and the Kurdistan Regional Government (KRG) further complicate matters. Disputes over oil production costs and revenue control, including a revision raising Kurdistan’s crude cost from $10 to $16 per barrel, have delayed the 2025 budget. The KRG’s loss of independent oil exports via Turkiye since March 2023 has cost $5 billion, straining its finances. The budget is now expected to reach Parliament by mid-April 2025, projected at $200 billion but burdened by deficits and declining reserves.
The crisis hits public services hard, with healthcare, education, and salaries for 2.5 million employees delayed, alongside shortages in 60% of hospitals and disruptions in 7,000 schools. The private sector suffers too, with 42% of 2024 development projects ($12 billion) stalled and construction activity down 20%. Experts warn that without swift action, Iraq risks economic instability, investor flight, and a weakened future.
