Washington to Shafaq News: We are focused on completing the withdrawal of our forces from Iraq by September 30

The US State Department confirmed on Wednesday that the United States is proceeding with the withdrawal of its military forces from Iraq by September 30, while it did not specify its position on a plan under which the process of disarming factions would extend to mid-2027. FinancialNews Reports

A spokesperson for the US State Department, responding to a question from Shafaq News Agency, said that Washington is proceeding according to the transitional schedule agreed upon with Baghdad to end the military operations of the coalition forces in Iraq, and is focused on completing the withdrawal of its forces by September 30, coinciding with the announced end of Operation Inherent Resolve.

He added that the move reflects the growing capabilities of the Iraqi security forces, including the Peshmerga forces, and represents a new phase in relations between the two countries.

The spokesman reiterated Washington’s support for Prime Minister Ali al-Zaidi’s efforts to extend Iraq’s sovereignty, prevent attacks within or originating from its territory, and build a partnership that serves the interests of both countries, referring to what President Donald Trump announced during his meeting with al-Zaidi at the White House on July 14.

Shafaq News’ question concerned whether the Ministry of Foreign Affairs had been informed of a phased action plan to postpone the complete disarmament of the factions until mid-2027, and whether it believed that this date was consistent with Baghdad’s commitments to restrict weapons to the state.

This comes after al-Zaydi announced, in an interview with the New York Times, a plan that begins with a 90-day deadline, followed by the handover of weapons by the factions, to be completed by June 30, 2027. The Iraqi government had linked accelerating the resolution of the issue to the end of the international coalition’s mission on September 30.

Following a meeting between al-Zaidi and US Secretary of State Marco Rubio in New York this week, the US State Department said the two sides agreed on the importance of dismantling what it called “terrorist militias” and preventing attacks from Iraqi territory.

The Prime Minister’s media office said that Al-Zaidi confirmed during the meeting his government’s determination to proceed with measures to restrict weapons to the state.

Shafaq.com

Al-Maliki reveals to the US chargé d’affaires a timeframe and program for restricting weapons by September 30

On Wednesday, Nouri al-Maliki, head of the State of Law Coalition, discussed with Steven Fagin, the acting US ambassador to Iraq, relations between the two countries, the latest political and security developments in Iraq and the region, and ways to enhance cooperation between Baghdad and Washington. FinancialNews Reports

During his meeting with Fagin in Baghdad, Maliki stressed the importance of developing relations between Iraq and the United States on the basis of mutual respect and common interests, especially in light of the Strategic Framework Agreement concluded between the two countries.

Both sides noted the importance of the Prime Minister’s recent visit to Washington last July, and its contribution to strengthening bilateral relations and opening new horizons for cooperation in a number of fields.

On the security front, Maliki affirmed that Iraq is proceeding with addressing the issue of restricting weapons to the state in accordance with the constitution and the law, and in a way that preserves the country’s security and stability. He pointed out that work is underway through the committee formed by the coordination framework to reach a clear and specific program, and stressed that addressing this issue must be done through dialogue and understanding and in accordance with constitutional and legal contexts.

He pointed out that there is a time limit and a program that will be announced on September 30 regarding restricting weapons to the state, noting at the same time that dealing with these issues should be done in a balanced and simultaneous manner that preserves Iraq’s sovereignty and national interests.

Regarding the attacks targeting neighboring countries, Maliki reiterated Iraq’s position rejecting the use of its territory as a launching pad for attacks on any country, whether by Iraqi or non-Iraqi groups, stressing the need to wait for the results of official investigations and not to issue premature statements or conclusions before they are completed.

He added that Iraq is looking forward to a new phase characterized by stability, construction, reconstruction, and enhanced services, and to taking advantage of the end of the foreign presence phase to move to a broader phase of economic and investment cooperation, calling on American companies to come and contribute to development and reconstruction projects in Iraq.

For his part, Fagin affirmed his country’s desire to continue cooperation with Iraq and strengthen the economic and investment partnership, noting that the United States seeks to support Iraq in strengthening its relations with its Arab neighbors and expanding areas of cooperation between the two countries, and stressing the keen interest of a number of American companies to work and invest in Iraq, and the need to create a suitable environment to enhance their presence in the Iraqi market.

At the conclusion of the meeting, both sides stressed the importance of continued communication and dialogue between Baghdad and Washington, which contributes to strengthening bilateral relations, supporting Iraq’s security and stability, and serving the common interests of the two countries and the stability of the region, according to a statement issued by Maliki’s media office.

Shafaq.com

Central Bank moves to lower dollar exchange rate against Iraqi dinar

The Central Bank of Iraq has taken a new set of measures aimed at reducing the gap between the official and parallel exchange rates, and restoring stability to the dollar exchange rates in local markets. IraqEconomic Reports

An informed source at the Central Bank of Iraq stated that these measures were taken due to the rise in the exchange rate of the dollar against the Iraqi dinar in local markets on Saturday, exceeding the level of 160,000 dinars per 100 dollars.

The bank continues to take measures and policies to develop the banking environment, raise the efficiency of the financial system, and provide the necessary elements to support sustainable economic growth, thereby achieving long-term financial stability and maintaining the stability of the exchange rate and the integrity of financial channels.

Earlier yesterday, the Central Bank of Iraq confirmed that it continues to finance foreign trade according to approved purposes and channels, while noting that foreign reserves meet all demands for foreign currency.

The bank said in a statement that “in light of what some media outlets are reporting about rising prices and a slowdown in market activity, the Central Bank of Iraq announces that it has sufficient foreign reserves to meet the demands for foreign currency for financing foreign trade, settling bank cards, and travelers’ requests for cash dollars at the official approved exchange rate.”

He added that “the rise in the exchange rate in the local markets is due to market speculation, expectations, and the misuse of geopolitical conditions in the region to disrupt the economic and financial situation by some beneficiaries of this situation,” stressing “his continued financing of foreign trade according to the approved purposes and channels, in a way that ensures the smooth flow of imports and the provision of the needs of the local market.”

According to the statement, the Central Bank of Iraq called on citizens to “rely exclusively on official information and data issued by it, and not to be swayed by news or information circulating through unreliable sources,” indicating that in case of any violations or inquiries, citizens can submit complaints and reports through the official complaints website of the Central Bank of Iraq.

Burathanews.com

Al-Kinani: Washington has set 10 points for the continued transfer of Iraqi funds

Economic and strategic expert Nasser al-Kinani revealed on Monday that the United States has set ten conditions for the continued transfer of Iraqi funds, including the surrender of weapons. He emphasized that these funds belong to Iraq and are not a US grant.

Speaking to the Information Agency, al-Kinani stated, “The United States has set ten conditions for the continued transfer of funds to Iraq, including the surrender of weapons and other matters, even though these funds are Iraqi and no entity has the right to withhold them from Iraq.”

He added, “Any funds Iraq needs must be requested by the Central Bank of Iraq from the US Federal Reserve for transfer, even though these funds are Iraqi revenues from oil sales and are not American charity or a grant.”

He explained that “the solutions are simple; a request can be submitted to the United Nations to confirm that Iraq is not indebted and that controlling Iraqi funds constitutes an infringement on Iraqi sovereignty.” He also noted that “the Iraqi negotiator was weak from the beginning and was unable to defend the rights of the Iraqi people.”

Al-Kinani pointed out that “an agreement was reached in 2010 to end the transfer of Iraqi funds to the Federal Reserve, and it included three obstacles imposed by the United States, which previous and current Iraqi governments have been unable to overcome.”
He added that “the argument that funds were going to entities claiming financial dues from Iraq has ended, especially after the payment of the last amount claimed by Kuwait, which was $1.65 billion.” He considered that the absence of other entities claiming financial dues from Iraq eliminates the justifications for continuing to control Iraqi funds.

Almaalomah.me

Warning of a “deep recession” in Iraq as trade and finance decline

On Monday, economist Manar Al-Obaidi warned of signs of a significant decline in Iraqi economic activity, particularly in the commercial sector, indicating that the decline in the Central Bank’s foreign currency sales, the decrease in imports, and the decline in bank financing could push the economy into a more pronounced recession. FinancialNews Reports

Al-Obaidi said in a post seen by Shafaq News Agency that “so far, there are no official integrated indicators that accurately show the growth or decline rate of Iraq’s GDP during 2026, except for the International Monetary Fund’s forecasts that indicated the possibility of the Iraqi economy contracting by about 6.8% during this year.”

He added that “reading a number of available indicators gives clear signs of a noticeable decline in economic activity, especially in the commercial sector, which is one of the most important sectors in Iraq after the oil sector and the government sector.”

He explained that “the Central Bank of Iraq’s sales of foreign currency have declined by more than 30% compared to last year, and official export data from a number of countries exporting to Iraq indicates a decrease in Iraq’s imports from them by more than 20%.”

Al-Obaidi pointed out that “these indicators, coinciding with the decline in financing provided by government and private banks, mean that a wide number of economic sectors are under increasing pressure, and the continuation of this trend may push the economy into a more pronounced recession.”

He explained that “in such circumstances, the state’s role should come through a package of economic incentives that help restore economic activity to its normal levels, whether through reducing some fees and customs tariffs, or granting temporary tax exemptions and facilities, or increasing the volume of financing facilities and launching easy financing initiatives that stimulate demand, investment and commercial activity. What is happening in some cases is going in the opposite direction.”

He added that “imposing procedures that require the payment of taxes and customs duties in advance before implementing the external transfer may lead to an increase in the financial and procedural burdens on traders and companies at a time when they are already suffering from weak liquidity, declining demand and difficulty in obtaining financing.”

He added that “the likely outcome is not necessarily an increase in government revenues, but may be a decrease in the volume of official transactions, and an increase in importers resorting to the parallel market to obtain foreign currency to meet import needs.”

He explained that “such measures may be understandable in an economy experiencing high growth and rapid business activity, where the need to control demand or increase government revenue is a clear priority.”

But he added that “applying it at a time when economic pressures are intertwined with geopolitical tensions, and amid signs of declining business activity, finance, consumption and investment, may increase the pressures rather than address them, and may push the economy from a slowdown into a deeper recession.”

Al-Obaidi stressed that “the main problem is that any economic measure should not be viewed in isolation from the rest of the indicators.”

He stressed that “before implementing any new policy, its economic objective must be clearly defined: Is the goal to increase revenues? Or to reduce the demand for the dollar? Or to regulate imports? Or to combat tax evasion? And what will be the impact of achieving this objective on trade, growth, employment, prices and the private sector?”

He pointed out that “the assumption that imposing additional fees or obligations will automatically lead to an increase in state revenues while the volume of trade and imports remains the same is an unrealistic assumption.”

He explained that “the higher the cost of procedures and the more complicated official trade routes become, the more natural it is for some economic activity to decline or move to other routes.”

He warned that “the greatest danger is that the repercussions of this will not be limited to traders or companies only, but will extend to the labor market, which already suffers from high unemployment rates, which may add greater economic and social pressure on the state in the coming period.”

Al-Obaidi concluded by saying that “economic policies during times of slowdown should be based on stimulus first, and that every measure should have clear targets and measurable indicators, with its impact on the economy as a whole being studied before its implementation, not after its results appear.”

Shafaq.com

During July, total deposits and cash credit in Iraqi banks declined.

Economic indicators issued by the Central Bank of Iraq showed a decline in total deposits and cash credit in Iraqi banks during July 2026. EconomicStability Analysis

According to data seen by Shafaq News Agency, total cash deposits in Iraqi banks amounted to 100.982 trillion dinars at the end of July 2026, compared to 104.879 trillion dinars at the end of June, a decrease of 3.897 trillion dinars, or 3.7%.

At the end of July, deposits were distributed between central government deposits amounting to 30.531 trillion dinars, public institutions deposits amounting to 22.769 trillion dinars, while private sector deposits amounted to 47.682 trillion dinars.

According to the data, total cash credit decreased to 71.432 trillion dinars at the end of July, compared to 71.504 trillion dinars at the end of June, a decrease of 72 billion dinars.

Cash credit was distributed as follows: 22.045 trillion dinars in credit provided to the federal government, 2.379 trillion dinars to public institutions, while credit provided to the private sector amounted to 47.008 trillion dinars.

Shafaq.com

Since 1990, Iraq has ranked 154th globally in per capita growth.

Iraq ranked 154th globally out of 176 countries in the ranking of countries where per capita real GDP achieved the fastest growth during the period from 1990 to 2025, recording an increase of 14%, according to a ranking published by the Canadian website Visual Capitalist, which specializes in economics and data.

According to the classification seen by Shafaq News Agency, Iraq’s per capita GDP, calculated according to purchasing power parity, rose from about $10,700 in 1990 to $12,200 in 2025, an increase of $1,500.

Iraq came in 154th place globally, ahead of Suriname, which recorded growth of 13%, Palau, with 11%, and Vanuatu, with 9%, while it came after the Comoros Islands, which achieved growth of 14%, with a different ranking.

Globally, per capita real GDP rose by 94% during the same period, from $11,300 to $21,900.

Guyana topped the global rankings, after its real GDP per capita rose by 1,549% since 1990, driven by increased offshore oil production that began in 2019, while China came in second, amid a long-term industrial and commercial expansion.

The report indicated that Asian economies made up about half of the list of the 25 fastest growing economies globally, while the United States ranked 88th globally, registering growth of 73% during the same period.

Shafaq.com

Banning advisors’ statements: a restriction on access to information or “discipline”?

Political and media specialists in Iraq confirm that regulating government media discourse can reduce conflicting official statements and positions, but they pointed out that the nature and limits of this unification procedures can affect the scope of dialogue and sources of information. News

On Saturday, Iraqi Prime Minister Ali al-Zaidi directed that all advisors and government officials be prevented from making press statements or appearing in the media without prior approval from his office, in order to comply with regulatory controls and ensure the unification of the government discourse and the consistency of the official message, while emphasizing the need to avoid issuing statements that do not accurately express the official position of the state.

This comes in conjunction with ongoing regulatory measures by the Media and Communications Commission, which during September included banning media appearances for a number of politicians, media professionals and analysts for varying periods, reaching in some cases 90 days.

The measures also included issuing official warnings to a number of local and foreign satellite channels for violations related to broadcasting rules and approved legal regulations.

In a parliamentary reading of the directive, Iraqi parliament member Imad Youkhna says that the decision concerns advisors and spokespeople associated with the Prime Minister’s office, with the aim of preventing conflicting information or the issuance of incomplete statements that may be attributed to the government.

Yukhna adds to Shafaq News Agency that the official spokesperson will remain the entity responsible for announcing government positions, stressing that regulating the media appearances of government employees does not necessarily mean restricting freedom of expression, but he emphasizes at the same time the need for controls that preserve the freedom of the media and access to information, in accordance with the law and Iraq’s international obligations.

It is noted that journalists generally face difficulty in obtaining information from official sources, and even official spokespeople for ministries and the government, which sometimes forces them to use old statements as background for their reports without updating, or to rely on personal sources within ministries to obtain information, without revealing their names.

For his part, Hadi Jalu Mar’i, spokesman for the Iraqi Journalists Syndicate, affirms that regulating media work must be based on the law and respect freedom of expression and the right to access information, warning against the strict and continuous restrictions that may limit the media’s ability to perform its role.

In his interview with Shafaq News Agency, Mar’i points to the need to enable analysts and media professionals to express their opinions, while adhering to the principle of not inciting hatred, violence, threats, or blackmail, and taking into account the social and cultural conditions and the diversity of sects and nationalities in Iraq.

A government advisor often makes statements in televised interviews or to news agencies that are controversial and force some institutions to issue a clarification afterwards.

The measure of preventing speakers from making statements without prior approval was previously taken by former Prime Minister Mohammed Shia al-Sudani, following controversial statements made by one of his advisors in a televised interview.

For his part, writer and political analyst Ali Al-Baydar believes that regulating media discourse is “an important issue and a necessity for any country,” considering that chaos in content may allow for the marketing of negative ideas about the Iraqi reality and lead to undesirable results.

Al-Bader tells Shafaq News Agency that setting standards that define who appears in the media and what content they present is necessary, but at the same time he warns against exceeding the limits of regulation, stressing the need to ensure that the procedures do not turn into “creating new dictatorships” at the expense of these concepts.

Regarding the recent directive concerning officials and advisors, Al-Bader believes that the government may have banned some media outlets close to it due to a loss of confidence in them or for reasons related to competence, so that their statements would not be attributed to the official position of the government.

From another perspective, Zainab Rabie, head of the “Al-Nakheel” Center for Press Freedoms, believes that preventing advisors from appearing or making statements before obtaining approvals is a normal procedure related to government work mechanisms, and is not related to restricting freedoms or the work of political programs.

Rabee told Shafaq News Agency that unifying the government’s discourse prevents multiple opinions and conflicting narratives regarding the official position, which could present journalists with contradictory information and affect their credibility. She emphasized her support for this approach as a means to arrive at a clear official position.

Political program presenter, Inas Halim, agrees on the importance of unifying the government’s discourse, stating in an interview with Shafaq News Agency that the issuance of contradictory statements by officials within the government may reflect negatively on the government’s image and positions.

Halim believes that returning to the Prime Minister’s media office before media appearances can help to control the official message, especially since some advisors hold advisory positions and do not necessarily represent official spokespeople for the government.

Shafaq.com

From a dinar that could buy the world… to a dollar that buys Iraq

Today, the Iraqi stands before the history of his dinar as one stands before an old photograph of a house he once lived in; he contemplates its features, searches for something familiar, then returns to the present and finds that the place is the same place, but things have lost much of their meaning. IraqEconomic Reports

In 1975, one US dollar was worth approximately 0.295 Iraqi dinars, meaning one dinar was worth more than three dollars at the nominal exchange rate at the time. Today, one dollar requires approximately 1310 dinars at the official rate.

But the gap between the two figures is not just a collapse in the value of a banknote. It is a gap that encapsulates decades of wars, blockades, sanctions, unrest, and oil shocks, and at the same time reveals an economy whose structure has changed, but which has not succeeded in freeing itself from its chronic dependence on a single resource.

But behind this monetary collapse lies a bigger question: How did the Iraqi economy change so much that its currency lost so much of its value? Or rather: What happened to the economy that was behind it?

Currency is more than just a piece of paper with a number on it; it is a reflection of the economy’s ability to produce, of people’s trust in its institutions, and of its ability to transform its resources into sustainable value.

The dinar does not weaken in a vacuum.

When domestic production declines, the need for imports increases, and public spending becomes hostage to oil revenues, the currency becomes more vulnerable to pressure, no matter how full the state coffers may seem of dollars.

Herein lies the great Iraqi paradox: a country rich in resources, but which has not fully transformed its wealth into a capabilities-rich economy.

Oil remains the backbone of the country’s revenues and exports. World Bank data indicates that in 2025 it accounted for approximately 88% of government revenues and 91% of merchandise exports.

This means that a rise in the price of a barrel of oil not only increases state revenues but also expands its spending capacity, stimulates demand, and increases the need for imports in an economy whose non-oil production base remains limited. When oil prices fall, this cycle contracts, and its effects are felt in the budget, investment, employment, and income.

Here, oil moves from the screens of global markets into the lives of citizens. It impacts salaries, food prices, transportation costs, rent, education, and medicine.

Therefore, the citizen does not ask about the gross domestic product or the size of the reserves as much as he asks a harsher question: Where does my country’s wealth go if I do not feel it in my life?

The answer begins with the difference between rent and capital.

Oil can finance spending, but that spending ends when its effects wear off. However, if a portion of oil revenue is channeled into investments that boost productivity in industry, agriculture, transportation, energy, and finance, it creates productive capacity that endures long after the initial dollar is spent.

Here the function of oil must change: oil should not be the economy, but rather a means to build an economy that is less dependent on it. EconomicStability Analysis

The true strength of the dinar does not begin with the central bank’s screen, but with the factory, the field, the port, the small company, the bank that finances a productive project, and the university that produces skills needed by the market.

A state can defend an exchange rate, but it cannot defend it forever in the face of an economy that does not produce enough.

It can provide dollars, but it cannot make importing a permanent substitute for production.

It can spend billions, but billions only become development when they are converted into productivity, jobs, real income, and exports.

Therefore, comparing the 1975 dinar with today’s dinar is not a naive call to restore an old exchange rate. It reflects a larger question:

Why hasn’t the enormous oil wealth been transformed into a productive base that makes the economy less fragile, and the citizen less afraid of the movement of the dollar?

That is the real test.

It’s not about how much the dinar is worth against the dollar, but rather how much value the Iraqi economy can generate behind each dinar.

A rich country is not just one that owns oil, but one that knows how to use it to build an economy that can, one day, live without it.

A strong currency is not one that has an impressive number, but one that is based on a strong economy, stable institutions, real production, and confidence that does not need to look at the dollar screen every morning to feel reassured.

In the end, the value of the paper may break, but the story will only break when Iraq fails to transform its oil from a wealth that is spent into an economy that produces, and from an economy that produces into a future in which the Iraqi does not need to look at the dollar every morning to know the value of what he owns.

Rawabetcenter.com

The Iraqi dinar between strong reserves and a crisis of confidence: Will the dollar’s turmoil turn into wider economic pressures?

The significance of the Central Bank of Iraq’s recent statement lies not only in its reaffirmation of the country’s sufficient foreign currency reserves, but also in its timing and what it reveals about the nature of the pressures facing the Iraqi economy. On September 19, 2026, the Central Bank confirmed its ability to meet the demand for foreign currency to finance foreign trade, settle bank card transactions, and provide dollars to travelers at the official exchange rate.

It attributed the recent rise in the dollar’s price in local markets primarily to speculation, market expectations, and the exploitation of geopolitical tensions in the region. This reassurance comes at a time when the parallel market has witnessed a significant decline in the value of the dinar, with $100 trading at levels approaching 160,000 Iraqi dinars on the unofficial market. This raises a significant economic paradox: if Iraq possesses substantial foreign currency reserves, why is the dollar rising? And why is the market concerned if the Central Bank’s ability to finance foreign trade remains intact, as the bank asserts? DinarExchange Rates

The answer begins with the necessity of distinguishing between a reserve crisis and a crisis of dollar access and market confidence. The central bank’s possession of large dollar reserves does not necessarily mean that all participants in the economy can obtain them with the same speed and at the same cost. The Iraqi exchange market effectively operates through two channels: official channels subject to banking requirements, compliance rules, and foreign trade financing regulations, and a parallel market that meets other forms of dollar demand. Therefore, the widening gap between the official and parallel exchange rates may indicate demand that is not being fully met through official channels, but it may also reflect increased precautionary and speculative demand stemming from expectations that the dollar will become more expensive in the future.

Here, expectations themselves become a powerful economic force. When households and businesses anticipate a rise in the dollar, demand for it increases. This increased demand drives the exchange rate upward, and this very rise then becomes a source of further anxiety and buying. In this way, the market can enter a cycle of fear, demand, speculation, and then more fear. From this perspective, the Central Bank’s statement should not be interpreted merely as a declaration of the size of Iraq’s financial resources, but also as an attempt to manage market expectations and prevent anxiety from morphing into collective economic behavior that would place further pressure on the dinar.

The second challenge, more directly related to the daily lives of Iraqis, is the transmission of exchange rate fluctuations to prices, inflation, and purchasing power. Iraq relies heavily on imports to meet domestic demand. Consequently, importers who cannot obtain dollars at the official rate and are forced to purchase them on the parallel market will incur higher import costs. This additional cost does not remain with the importer but is gradually passed down the supply chain, from wholesalers to retailers, and ultimately to the end consumer.

At this point, the problem becomes far more significant than simply the rising dollar exchange rate displayed on exchange bureaus’ screens. The dinar’s weakness in the parallel market can translate into higher prices for food, clothing, electronics, spare parts, raw materials, and other imported goods. If household income remains stagnant while prices rise, purchasing power erodes even without a nominal decrease in salaries. This is one of the most important channels through which exchange rate pressures are transmitted to the real economy. Rising prices force households to reduce their consumption, while reduced consumption, in turn, slows down business activity. This issue is particularly important because the central bank itself, in its statement, acknowledged the widespread concerns about rising prices and the slowdown in market activity.

But a longer-term analysis places the current situation within a broader structural problem related to the rentier nature of the Iraqi economy and its heavy reliance on both oil and the dollar. Oil accounts for roughly 90% of Iraq’s government budget revenues, according to Reuters, and a significant portion of these revenues flows through the central bank’s accounts at the Federal Reserve Bank of New York. This structure gives Iraq considerable capacity to build up foreign reserves when oil exports and prices are favorable, but it also makes fiscal and monetary stability highly dependent on the continued flow of oil revenues and regular, reliable access to the international financial system.

In August 2026, Reuters reported that Iraq held over $100 billion in reserves in the United States, highlighting the Iraqi economy’s sensitivity to its financial ties with Washington. Therefore, the fundamental economic question is not simply the central bank’s ability to defend monetary stability today, but rather how long the Iraqi economy can maintain this stability if geopolitical shocks persist or if oil revenues and international financial channels come under continued pressure.

From this perspective, the current situation can be viewed through three possible paths, not as inevitable predictions, but as a framework for understanding risks. The first path is that the recent rise in the dollar is primarily due to speculation and temporary anxiety. In this case, a decrease in geopolitical tensions, continued availability of foreign currency, and a restoration of market confidence could lead to a narrowing of the gap between the official and parallel exchange rates.

The second possibility is that this gap will persist for a longer period. In this case, inflationary pressures become more significant, as businesses and traders may increasingly base their pricing on the actual cost of obtaining dollars rather than the official exchange rate. The longer this divergence continues, the greater the likelihood that the parallel market rate will become a factor in pricing decisions within the domestic economy.

The third scenario, the most economically dangerous, could unfold if persistently high demand for the dollar coincides with a prolonged decline in foreign currency inflows. In that case, the problem would no longer be primarily a crisis of expectations or speculation, but could gradually escalate into pressure on foreign reserves, fiscal policy, imports, and overall economic activity.

Therefore, foreign reserves, however large, should not become a substitute for addressing the structural imbalances plaguing the Iraqi economy. While reserves represent an important line of defense, they are not a permanent solution to the budget’s dependence on oil, the market’s reliance on imports, or the persistent gap between official and parallel channels for obtaining foreign currency. As long as reserves are used to absorb shocks without simultaneously expanding the economy’s capacity to generate alternative sources of foreign currency, economic stability will remain contingent on two factors over which Iraq has no complete control: global oil market conditions and the geopolitical environment.

Therefore, the question that should be at the heart of the Iraqi economic debate is not simply: Does the Central Bank have enough dollars today? Its recent statement confirms that it does. The more important question is: Does the Iraqi economy possess the structure to reduce its recurring need to defend the dinar using oil revenues?

Herein lies the deeper challenge. Sustainable monetary stability is not measured solely by the amount of foreign currency held by the central bank, but also depends on the economy’s ability to produce, export, attract investments, and diversify revenue sources, in addition to developing a banking sector capable of directing foreign currency efficiently and transparently towards legitimate economic activity.

Until these structural foundations are strengthened, the movement of the dollar in Iraq will remain more than just an indicator of exchange market conditions. It will continue to be a mirror reflecting the level of confidence in the economy, a measure of its ability to absorb external shocks, and a test of Iraq’s eventual capacity to transform its oil wealth from a tool used to defend short-term stability into a foundation for building a more diversified economy less vulnerable to future crises.

Economic Studies Unit / North America Office,
Link Center for Research and Strategic Studies GlobalEconomy News

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