Shafaq News deciphers the “code” of the biggest threat to the Iraqi dinar

The Iraqi citizen may not directly feel the rise or fall of the Central Bank’s foreign currency reserves, but he feels its effects in the dollar exchange rate, commodity prices, the purchasing power of the dinar, and even in the state’s ability to cope with economic crises. Arabs& Middle Easterners

Foreign reserves are considered the “first line of defense” for the Iraqi economy, as they give the central bank the ability to protect the dinar’s exchange rate, finance import operations, and maintain confidence in the financial sector, especially in a country that depends almost entirely on oil revenues.

In recent years, the reserve has recorded a gradual decline, as it decreased from $111.6 billion at the end of 2023 to $100.2 billion in 2024, then to $97.4 billion at the end of 2025, before settling at $97.8 billion at the end of April 2026. Despite this decline, experts confirm that the reserve is still at safe levels, but it remains dependent on oil prices and the state’s financial management.

In this regard, the Prime Minister’s financial advisor, Mazhar Muhammad Saleh, said that the Central Bank’s reserves are still within reassuring limits according to international standards, as they cover Iraq’s imports for about 12 months, while the global standard is only three months.

Saleh confirmed to Shafaq News Agency that these levels give the Central Bank significant ability to intervene in the exchange market and maintain the stability of the dinar, explaining that the size of the reserves is one of the most important indicators of the strength of monetary policy. He pointed out that exchange rate stability does not depend on reserves alone, but is also linked to oil prices, government revenues, the efficiency of the banking sector, and the level of confidence in the economy.

For his part, economist Mohammed Al-Hassani believes that the central bank’s reserves are primarily fueled by oil revenues, while non-oil revenues remain of limited impact.

Al-Hassani told Shafaq News Agency that the Central Bank does not use these funds to finance the budget, but rather to maintain monetary stability, support the dinar’s exchange rate, secure the necessary dollars for imports, and bolster investor confidence in the Iraqi economy. He noted that a portion of the reserves is invested in safe and highly liquid financial instruments with international institutions, thus preserving their value and ensuring their availability when needed.

Mahmoud Dagher, the former general manager of the Central Bank, believes that the impact of the reserve on the citizen is indirect, explaining that its real impact appears when speculation on the dollar increases or confidence in the market declines.

Dagher told Shafaq News Agency that news and rumors about the economy or oil exports are driving some citizens and merchants to buy dollars, increasing demand and driving up its price on the parallel market. Since Iraq relies heavily on imports, any rise in the dollar’s value inevitably leads to higher prices for imported goods and a decline in the dinar’s purchasing power, according to Dagher.

For his part, Najm Abdul Tarish, a professor of political science at Dhi Qar University, pointed out that the continued decline in oil prices to levels ranging between $55 and $60 per barrel may put pressure on reserves, if it coincides with continued high government spending.

Abdul Tarish explained that the reserves will not decline sharply in the near term, but they could gradually erode if oil revenues continue to fall without genuine economic reforms. He stated that protecting the reserves cannot be achieved by relying solely on oil, but rather through economic diversification, increasing non-oil revenues, and encouraging investment and domestic production.

What does this mean for the citizen?

According to experts, keeping the reserves at their current levels reassures the markets and strengthens the stability of the dinar’s exchange rate, while a prolonged decline in reserves could reduce the central bank’s ability to intervene, negatively impacting the prices of the dollar and imported goods.

Thus, the central bank’s reserves are not just a number in financial reports, but one of the most important guarantees for the stability of the Iraqi economy, and largely determine the state’s ability to protect the dinar, confront crises, and maintain the purchasing power of citizens.

Shafaq.com

The government’s financial advisor reveals the fate of funds recovered from corrupt individuals.

The Prime Minister’s financial advisor, Mazhar Muhammad Salih, confirmed on Tuesday that the funds recovered from corrupt individuals represent exceptional revenues that cannot be relied upon in preparing public budgets. He indicated that these funds will contribute to reducing the deficit gap and financing projects. Salih told the official news agency, “The funds recovered from corrupt individuals are important and non-recurring exceptional revenues, as they cannot necessarily and permanently be relied upon in preparing public budgets. However, they constitute an important source of revenue in financial planning.”

He continued, “These funds are often directed towards bridging the deficit gap or financing specific projects that directly affect people’s lives, or strengthening the country’s financial reserves, and not towards building the annual budget within a long-term financial policy, because that is linked to the ceilings and capabilities of financial policy within the framework of preparing and implementing public budgets.”

He also stressed that “recovering corruption funds is important because it reduces financial waste, supports the public treasury, and enhances the confidence of citizens, investors, and the international financial community in the country’s economic system,” noting that “funds recovered from corrupt individuals represent an important support tool for the national economy, but they are not necessarily a complete replacement for the general budget, as this depends on the size and ceilings of public spending.” Corporate& Financial Crime

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A corruption deal in the Ministry of Defense has been uncovered, with victims amounting to 1.6 trillion dinars.

The head of the Victorious parliamentary bloc, Faleh al-Khazali, announced on Tuesday a corruption deal in the Ministry of Defense that cost 1.6 trillion dinars, and called on Prime Minister Ali al-Zidi to investigate the matter. Corporate& Financial Crime

Al-Khazali said in a press conference, “While we support the government’s measures to address and confront corruption, we submitted an official letter to Prime Minister Ali al-Zaidi regarding corruption in the Ministry of Defense within a deal to sell scrap metal,” indicating that “the quantity is no less than 4 million tons of iron and may increase.”

He added, “According to the appraisal committee and in accordance with the State Property Sale and Lease Law No. 21 of 2013, the approximate sale was at 600,000 dinars per ton, and therefore, when this number is added, the amount is 2 trillion and 400 billion Iraqi dinars,” explaining that “by skipping over the law and through exceptional procedures, the sale was made at a price of 200,000 dinars per ton, and therefore the waste in this file is 1 trillion and 600 billion Iraqi dinars.”

He stressed that “this is not imagination or analysis, but real information,” noting that “I am directing my words to the Prime Minister regarding the waste in this file amounting to no less than 1 trillion and 600 billion Iraqi dinars.”

He stressed the need to “address this issue and invest the funds correctly,” explaining, “In our letter to the Prime Minister, we requested that this amount be allocated to support air defenses.”

He explained that “according to our information, the Ministry of Defense has a contract with South Korea to arm it with air defense systems for $2.7 billion, and the Iraqi government paid $500 million with the expectation that the batteries would be delivered in 2025. However, the lack of funding and allocation to the Ministry of Defense has affected the arming, so South Korea notified Iraq that the weapons would be sold to one of the countries that had submitted an offer to import them.”

He stressed “the need to invest this money in supporting the Ministry of Defense with air defense systems instead of these sums going into the pockets of corrupt people.”

Burathanews.com

The Integrity Commission and the Central Bank agree to uncover corruption crime networks and eliminate money laundering channels.

The head of the Federal Integrity Commission, Mohammed Ali Al-Lami, agreed today, Thursday, with the governor of the Central Bank, Nizar Nasser Hussein, to dry up the avenues for smuggling money . Currencies& Foreign Exchange

The commission said in a statement received by Mail that “the head of the Federal Integrity Commission, Muhammad Ali Al-Lami, stressed during his meeting with the governor of the Central Bank, Nizar Nasser Hussein, the importance of adopting parallel financial investigations as an effective tool in tracking the proceeds of corruption crimes and revealing their paths.”

He added that “Al-Lami also discussed, during his meeting with the Governor of the Central Bank, ways to enhance cooperation and coordination between the two sides, in order to support national efforts aimed at protecting the financial system, consolidating the principles of transparency and integrity, and mutual support in implementing procedures that would reduce corruption, money laundering, and financial violations.”

Al-Lami stressed “the need to tighten control and regulate the channels through which money is smuggled, in order to protect public funds and enhance integrity, through the integration of the efforts of the relevant institutions.”

For his part, the Governor of the Central Bank, Nizar Nasser, stressed “the importance of strengthening cooperation with regulatory bodies, given its impact on protecting public funds, reducing corruption and financial violations, enhancing confidence in the financial system, and establishing standards of transparency and integrity in line with best institutional practices.”

Miliq. news

Iraq at an economic crossroads: Fears of a rising dollar and debate over remaining in OPEC

Anxiety continues to grip a large segment of the Iraqi population, particularly those with limited incomes and low salaries, amidst economic instability and conflicting reports regarding the exchange rate of the dollar against the dinar. The Iraqi public is most concerned about market prices and their susceptibility to government decisions regarding the dinar-dollar exchange rate, as well as the future of Iraq’s membership in OPEC, its oil export volumes, and the implications of these factors for the country’s economic policy and how the government will address them.

Former MP Rasoul Radhi told Al-Maalomah that “the ongoing financial crisis, coupled with regional developments and the current difficulties in exporting oil, will lead to a significant rise in the dollar exchange rate in local markets.”

He added that “the current exchange rate exceeds 155,000 dinars per 100 dollars and may rise further in the coming days, especially since the government intends to raise the official exchange rate if the economic situation remains unchanged.”

He explained that “the measures the government may take in the coming days aim to compensate for the shortfall in oil export revenues, and the official exchange rate is likely to increase by 6,000 dinars from its current level.”

For his part, economist Abdul Rahman Al-Mashhadani told Al-Maalomah that “talking about Iraq leaving OPEC is not a simple matter at all, as Iraq cannot leave the organization because it would not be able to withstand any price war that might erupt.”
He added that “Iraq has already suffered greatly from the price war between Russia and Saudi Arabia, which prompted Riyadh to reduce the price of a barrel of oil by more than $7 while increasing production by about 500,000 barrels, leading to a drop in the price per barrel to about $18.”

He pointed out that “Iraq lacks the resources to withstand any price war, in addition to its lack of a sovereign wealth fund and diversification in exports and production. Therefore, any decrease in oil prices will significantly affect it.” He emphasized the importance of Iraq remaining within OPEC, while exerting pressure to adjust its export quota, based on its high production capacity and its status as the fifth largest country in the world in terms of oil reserves.

In a related context, Abdul Rahman al-Jazaeri, a member of the Coordination Framework, confirmed in a statement to Al-Maalomah that “Prime Minister Ali al-Zaidi is an expert in economic affairs and continues to work on finding solutions to the economic problems that Iraq is currently suffering from.”

He continued, “Al-Zaidi’s expertise in the economic field has driven him to take action to find ways out of the current crises facing the country, which may lead to an increase in the exchange rate of the dollar against the Iraqi dinar.”

He added that “Iraq is moving towards a new economic program that may include raising the value of the dollar against the dinar, due to the economic hardship and problems facing the country, which the Prime Minister is working to address according to an economic vision aimed at enabling Iraq to overcome its crisis.” Arabs& Middle Easterners

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Analysis: Iraq races to maximize its oil revenues before global demand declines

Reuters highlighted Iraq’s move to increase its oil production and maximize the benefit from its reserves, noting that Baghdad, along with the UAE, is racing against time to convert its reserves into revenues before the global shift in the energy sector leads to a decline in oil demand.

The agency stated, in an analysis published in its “Gulf Currents” bulletin, that Iraq and the UAE, despite their different economic circumstances, are adopting an approach based on the premise that postponing the exploitation of oil reserves may be more costly than accelerating their production at the present stage.

She pointed out that Iraq relies on oil for about 88% of government revenues, explaining that the recent war and the accompanying unrest prompted Baghdad to reduce its daily production from about 4.2 million barrels to less than 1.5 million barrels during May, which increased the need to raise production to compensate for lost revenues.

She added that new investments worth billions of dollars from BP, Total Energies and ExxonMobil have boosted expectations that Iraq can turn its large oil reserves into sustainable financial returns, but this trend coincides with concerns about a structural decline in global oil demand in the coming years.

She pointed out that the biggest challenge lies in the possibility that a number of producing countries will rush to increase supplies at the same time, which could lead to a glut in the market and a drop in prices, given expectations that global supply will rise by about eight million barrels per day during 2027, compared to slower growth in demand.

Reuters concluded that Iraq and the UAE’s gamble hinges on timing, amid questions about when global oil demand will permanently decline, and whether producers will be able to maximize returns from their reserves before that happens.

Iraqi Prime Minister Ali al-Zaidi had announced Iraq’s desire to raise crude oil production rates to about 7 million barrels per day, and indicated that American companies had been informed of this vision.

Shafaq.com

Central Bank of Iraq: Domestic currency issued rose to 112.9 trillion dinars by the end of April

Data from the Central Bank of Iraq, released on Thursday, showed that the volume of currency issued in the country rose to 112.896 trillion dinars from the beginning of 2025 until April 2026. News

According to data seen by Shafaq News Agency, the total currency issued during the past year amounted to 99.799 trillion dinars, and 13.097 trillion dinars were added to it during the first four months of this year.

The net currency traded outside banks rose to 104.542 trillion dinars, after reaching 92.560 trillion dinars at the end of 2025, registering an increase of 11.982 trillion dinars.

The currency held by banks also increased to 8.354 trillion dinars by the end of April 2026, compared to 7.239 trillion dinars at the end of 2025, an increase of 1.115 trillion dinars.

These indicators point to the growth in the volume of issued and circulating currency in the Iraqi economy during the first months of 2026, coinciding with an increase in circulating cash liquidity and a rise in the volume of cash held by the banking sector.

Shafaq.com

More than 8 million barrels of Iraqi oil are stuck on tankers despite the return of Gulf supplies.

More than 8 million barrels of Iraqi crude oil remain stuck on tankers, while more than 100 million barrels of crude oil and petroleum products that had accumulated in the Gulf have begun to gradually return to global markets, providing a temporary relief to supplies, according to data from Standard & Poor’s Global Commodity Insights.

The report stated that Iraq has emerged as one of the leading countries in the recovery of oil production in the Middle East, along with the Sultanate of Oman, while major refineries in Saudi Arabia, Bahrain and Kuwait still need several months to restore their full operational capacity.

According to the data, the accumulated quantities of crude oil amounted to about 90.5 million barrels, while the remaining quantities were distributed among various petroleum products, with more than 90 million barrels of crude oil on board tankers waiting to leave.

Estimates also showed that Iraq has about 8.3 million barrels of oil stuck on tankers, coming after Iran (31.7 million barrels), Saudi Arabia (18.7 million barrels), and the UAE (17 million barrels), while Kuwait recorded 8.1 million barrels, Qatar 4 million barrels, and Oman 2.2 million barrels.

The report indicated that most Gulf oil exports are destined for East Asian markets, meaning that the return of these supplies could affect the balance of global supply and demand, and be reflected in the movement of oil prices and the revenues of producing countries, at a time when global banks expect exports to return to pre-war levels during the current month of July, with continued concerns that the impact of these quantities will be temporary before the actual production in the region recovers.

Shafaq.com

Security cooperation between Baghdad and Erbil: Will it bring American oil companies back to Kurdistan?

Security coordination between Baghdad and Erbil is flourishing despite years of regional conflict, which is enticing American and Western oil companies to return to the Kurdistan Region, while Baghdad is moving to deploy air defense systems in the region to secure an air protection umbrella for it, according to a summary presented by the British website “Amwaj”. News

The air defense systems are intended to protect oil and gas fields from a repeat of the drone attacks that have plagued such sites in recent years.

According to the British website’s report , translated by Shafaq News Agency, this security agreement between Baghdad and Erbil comes at a time when Prime Minister Ali al-Zaidi pledged to foreign energy companies that Iraq would be able to protect their investments .

The British report continued that the potential deployment of air defense systems could represent a significant shift in the historically strained relationship between the federal government and the region, noting that the ongoing dialogue about air defense systems also coincides with the efforts made by US Presidential Special Envoy Tom Barrack to unite the two neighbors within a single economic and security framework .

Although he pointed to “headwinds” represented by the Kurdish leaders’ commitment to ensuring that the regional government retains control over its security and autonomy, he believed that the direct threat of regional escalation and the shared vulnerability of Iraq’s vital energy infrastructure necessitate a practical compromise . In this context, he noted the recent visit of a high-level Iraqi security delegation to Erbil to assess the mechanisms for deploying air defense systems at energy sites in the region, even though federal officials had previously expressed concern about Kurdish forces gaining more autonomy in security matters.

Therefore, the report considered that visit to indicate a shift in priorities, and that this increased security coordination is driven by the shockwaves caused by the Israeli-American strikes on Iran on February 28, as the region found itself on the front lines of retaliatory attacks, including targeting energy infrastructure sites, some of which are linked to international companies such as the US-based Carr Group and HKN.

According to the report, these attacks disrupted domestic production and exposed deep vulnerabilities of Western commercial interests to Iranian-backed militias.

The report added that the al-Zaidi government, recognizing that international oil companies would not resume operations without strict security guarantees, appeared to have moved quickly to bridge the historical gap between Baghdad and Erbil .

The report quoted Caroline Rose, a researcher at the Soufan Center in the United States, as saying that the potential deployment of air defense systems in the Kurdistan Region would represent a “new level of relations” between the federal and regional authorities, after attacks on energy sites revealed the vulnerability of these facilities. She added that this mutual threat has prompted both sides to postpone their long-standing disputes, at least partially, in order to establish “sustainable air defense systems” around vital infrastructure .

While Rose said that the possibility of concluding an air defense agreement could be a starting point for further coordination, and that current efforts would primarily represent a “confidence-building measure,” the report quoted Erbil-based analyst Vladimir van Wilgenburg as saying that the move to deploy air systems “could translate into broader security cooperation, such as joint exercises involving Iraqi security forces and the Peshmerga.”

The report quoted Mohammed Saleh, a researcher at the American Foreign Policy Research Institute, as saying that the move by Baghdad towards the region was long overdue, considering that Washington must pressure Baghdad to facilitate the deployment of the air systems, but he warned that the systems should not become a means for Baghdad or the factions allied with Iran to expand their influence and control over the Kurdistan Region.

After discussing al-Zaidi’s campaign to “monopolize weapons,” which primarily concerns groups operating under the banner of the Popular Mobilization Forces, the report noted that Kurdish leaders say that Baghdad’s efforts will not extend to the Peshmerga.

The report quoted Saleh as saying that there are no plans to “subject the Peshmerga” to the same disarmament procedure, noting that the special status of the Peshmerga is recognized under Article 121 of the Iraqi Constitution, and that, in contrast, the Popular Mobilization Forces were only formalized as an element of the Iraqi armed forces under the parliamentary mandate in 2016 . Arabs& Middle Easterners

The report stated that the flourishing coordination between Baghdad and Erbil on security is playing a role in enticing Western oil companies to return to Iraq, pointing, for example, to the position of Chevron and Halliburton in meeting with Iraqi officials to hold talks on restarting their investments, coinciding with hopes that Iranian-American talks could prevent a renewal of the regional conflict.

The report noted that the apparent interest shown by Western companies in this return is consistent with broader US strategic objectives aimed at countering increasing Chinese and Russian involvement in Iraq’s energy sector.

Wilgenburg was quoted as saying that “the Trump administration was one of the few administrations that managed to bring American oil companies back into the Iraqi energy sector.”

The report concluded that the future benefit of Iraq’s oil and gas sector depends on addressing the root cause of instability, rather than merely protecting against it. While tactical defensive measures in Iraqi oil fields may provide immediate reassurance to foreign investors, they do not eliminate the broader, fundamental political and military threats to Iraq’s stability. Therefore, the report quoted Wilgenburg as saying that any move by Baghdad to “dismantle the Popular Mobilization Forces” would be more effective than deploying air defense systems in the Kurdistan Region.

Shafaq.com

Al-Zaydi launches the biggest battle against corruption… Will the Iraqi economy begin its recovery journey?

Despite possessing one of the world’s largest oil reserves, the Iraqi economy faces significant challenges. It remains heavily reliant on oil revenues, while state institutions suffer from administrative corruption, weak economic diversification, and declining public trust in the banking sector, in addition to the impact of political and regional conflicts. Since 2003, Iraq has faced accumulating challenges that have affected the efficiency of state institutions and delayed the implementation of numerous development and reconstruction projects. Today, with the new government’s approach, an opportunity has emerged to launch a reform phase that could rebuild confidence in the Iraqi economy and pave the way for investment and sustainable development.

Analysis

The arrest campaigns carried out by the new Iraqi government under Prime Minister al-Zaidi represent a significant step in the fight against corruption, and a message that the state is moving towards strengthening the rule of law and holding accountable those proven to be involved in the squandering of public funds. However, these measures should be the beginning of a long reform process that addresses the root causes of corruption, and not be limited to prosecuting individuals alone.

Over the past years, corruption has been linked to the structure of state institutions, as some government institutions have transformed from public service providers into centers of political and financial influence, which has weakened the efficiency of management and affected the state’s ability to implement its development projects and attract investments.

Financial reform stands out as one of the most important tools for change. The transition to a more transparent financial system, based on digital transactions and modern oversight, contributes to documenting the flow of funds, reducing money laundering, and minimizing opportunities for bribery and tax evasion. In the modern economy, the efficiency of the financial system has become one of the most important indicators that investors rely on when making their decisions.

Moreover, the relationship between the economy and security has become more intertwined than ever before. The stability of financial and administrative institutions not only reflects on economic performance, but also enhances political stability and strengthens the confidence of the local community and international partners in the state’s ability to manage its resources efficiently.

Therefore, developing the banking system, strengthening financial compliance, and increasing transparency are all essential factors in creating a more stable investment environment. The greater the confidence of both local and foreign investors, the greater the opportunities for implementing new projects, creating jobs, and diversifying national income sources away from near-total dependence on oil.

This stage also requires launching a national program for institutional reform, based on modernizing state institutions, developing oversight systems, enhancing the independence of oversight and judicial bodies, and simplifying administrative procedures, in order to reduce bureaucracy and increase the efficiency of government performance.

At the same time, investment in infrastructure is one of the most important keys to economic growth. Rehabilitating electricity, water, road, port, and public service networks will provide a more attractive environment for investment, support the private sector, and contribute to improving the quality of life for citizens.

From an economic standpoint, genuine reforms can boost investor confidence, strengthen the banking sector, reduce money laundering, improve public revenues, encourage local and foreign capital to invest in Iraq, expand the use of the formal banking system, and shrink the size of the informal economy.

If reforms remain limited or merely cosmetic, the same challenges may persist, including weak investor confidence, capital outflows, continued reliance on cash, and declining efficiency of financial institutions, limiting the economy’s ability to achieve sustainable growth.

Conclusion

The new government’s anti-corruption campaign represents an important opportunity that could establish a different phase in the history of modern Iraq. However, its true success will not be measured by the number of detainees, but rather by the state’s ability to transform these steps into a comprehensive institutional and financial reform project that enhances transparency, enshrines the rule of law, and strengthens state institutions.

More than two decades have passed since 2003, and today Iraq has an opportunity to rebuild its economy on more sustainable foundations by attracting investments, developing infrastructure, diversifying sources of income, and establishing an economic environment based on efficiency, transparency, and accountability.

If the government succeeds in combining anti-corruption efforts with economic and administrative reform, this could mark the beginning of a new phase that opens up broader horizons for growth and stability, restores Iraq’s economic standing, and gives citizens hope for a more prosperous future.

Economic Studies Unit / North America Office,

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