Regional turmoil severely affects Iraqi economy

Baghdad (IraqiNews.com) – The prolonged conflict between the United States and Israel on one side, and Iran on the other, has thrown a deep shadow over the Iraqi economy, posing one of its most severe financial problems in the past few years. The shutdown of the Strait of Hormuz and the consequent interruption of marine traffic have jeopardized Iraq’s key route of oil exports, which are the primary source of state revenue. Concerns in Baghdad have officially risen when Iraqi Foreign Minister Fuad Hussein warned of the serious consequences of the closure of the strait. Hussein emphasized that the financial situation has become critical given Iraq’s reliance on this vital waterway for the majority of its oil exports. The Iraqi foreign minister indicated that the current war and the disruption of shipping could directly impact the government’s ability to meet its financial obligations, including employee salaries. Hussein noted that the authorities are now depending on financial reserves, bonds, and domestic debt to cover essential expenditures. The Central Bank of Iraq (CBI) emphasized the importance of adopting long-term financial policies to shield the economy from external shocks and oil market turbulence. To promote economic stability, the CBI recommended diversifying revenue sources, enhancing public debt management, and establishing financial reserves. Iraq, a founding member of OPEC, was exporting around 3.5 million barrels of oil per day prior to the conflict, the majority of which traveled via the Strait of Hormuz, reflecting that any stoppage in shipping traffic in the strait adversely impacted government finances. According to observers, the Iraqi government is already having issues covering salaries. Currently, the country’s oil income does not exceed two trillion Iraqi dinars (approximately $1.52 billion) each month, while non-oil revenues total around 1.5 trillion Iraqi dinars ($1.14 billion). The government in Iraq requires around 8.5 trillion Iraqi dinars (nearly $6.5 billion) every month just to pay wages. The post Regional turmoil severely affects Iraqi economy appeared first on Iraqi News.