Baghdad (IraqiNews.com) – Economic expert Manar Al-Obaidy has warned that Iraq is heading toward a dangerous financial bottleneck, as official data for August 2025 reveal deepening deficits, rising spending, and increasing pressure on the Central Bank’s reserves. In an analysis shared publicly, Al-Obaidy outlined several indicators that he described as alarming and reflective of a serious structural imbalance in Iraq’s financial system.
According to Al-Obaidy, total revenues for August 2025 reached 82 trillion dinars, of which 73 trillion were from oil and only 9 trillion dinars came from non-oil sources. Meanwhile, public expenditures climbed to 87.5 trillion dinars, including 73 trillion in operational spending alone. An additional 5 trillion dinars were recorded as government advances, which are typically added to the final annual expenditures.
Based on these figures, Al-Obaidy emphasized that the actual deficit by the end of August reached 10 trillion dinars, with projections suggesting the deficit may exceed 15 trillion dinars by the end of 2025. He described these numbers as a clear warning that Iraq is entering a phase where traditional financing tools will no longer be sustainable.
Al-Obaidy also highlighted concerning trends in the Central Bank’s foreign currency operations. He noted that between January and September 2025, the Central Bank purchased 49 billion dollars from the Ministry of Finance, while selling more than 60 billion dollars through the foreign currency auction window. This forced the Bank to withdraw 11 billion dollars from its foreign reserves to meet the domestic demand for dollars.
He warned that this pattern represents a continuous drain on reserves during a period in which global oil prices have fallen to 60–65 dollars per barrel, significantly reducing Iraq’s fiscal space. With operational spending at record levels, he argued that neither the current government nor the next will be able to cover essential expenditures without decisive reforms.
While borrowing could offer temporary relief, Al-Obaidy noted that Iraq’s internal debt has already surpassed 90 trillion dinars, reducing the capacity of the local market to absorb more debt instruments.
He stressed that the real solution begins with a forensic breakdown of public spending with a focus on identifying financial waste. Areas requiring urgent review include ghost employees, pension files, and social welfare programs, which he said contain significant leakages and are sometimes used for political purposes.
Al-Obaidy also called for reevaluating the food ration card system, subsidized medicine programs, and other forms of public support to ensure they reach the people who truly need them.
He warned that Iraq is approaching a critical turning point, especially with the possibility that the 2026 budget may face delays due to the formation of a new government. This scenario, he said, would leave the country operating for months without a clear spending ceiling.
“The real deficit has moved beyond being numbers in reports,” Al-Obaidy said. “It has become a genuine threat to the state’s ability to sustain salaries and financial obligations. If the crisis is not addressed urgently and responsibly, Iraq may be forced to adopt harsh measures that will affect the poor and unemployed before anyone else.”
