For those who can't get on OM, and who don't have access to the forum. I will post here the articles I like for the day and some of my thoughts. Check back later
Al-Baiji: The new Iraqi currency is ready... and the law to remove zeros will reach parliament soon.
link
The file of reforming the Iraqi currency has entered a more sensitive stage, after statements by the member of the Parliamentary Finance Committee, Mansour Al-Baiji, regarding the readiness of a new Iraqi currency, and the imminent arrival of the draft law to remove zeros to the House of Representatives for legislation and voting.
The video for this Special Edition My FX Buddies Blogpost is below here:
According to what Al-Baiji said in a television interview, the government and the Central Bank of Iraq have completed some of the technical preparations related to the new currency, noting that the value of the currency that was prepared and printed amounts to about $250 million, and that its release into the market will be linked to the approval of the legal framework by the House of Representatives.
These statements come at a time when the issue of restructuring the Iraqi currency has returned to the forefront of economic discussion, after years of studies and proposals that addressed the project of removing three zeros from the dinar.
But the importance of the current development does not lie merely in issuing new banknotes, but rather in the mechanism that the state will adopt to move from the current currency to the new currency, which is the point that may determine the success of the process or turn it into a source of monetary instability if it is not managed carefully.
From an old project to a potential legislative decision
The idea of removing zeros is not new to Iraqi monetary policy. The Central Bank of Iraq published studies in the past outlining a plan to remove three zeros, explaining that the process is of an accounting and organizational nature, and does not automatically mean an increase in wealth or purchasing power for citizens.
Official data confirms that the Central Bank is the legally authorized entity to issue Iraqi currency, determine its denominations and designs, and make arrangements for its issuance.
Therefore, talk of a new currency must be separated from the concept of raising the value of the dinar.
Removing zeros, in essence, means changing the unit of account for the currency. If three zeros are removed, an amount of one million dinars might become one thousand new dinars, while the nominal economic value remains the same if the transaction is carried out at a fixed conversion rate.
This means that a citizen does not become richer simply by changing the shape of the numbers.
Why does the project need a law?
The transition from the old currency to a new currency on the scale of the Iraqi economy cannot be merely an administrative decision to issue new banknotes.
The state needs to determine the conversion rate, the dual circulation period, the mechanism for currency exchange, and address contracts, salaries, deposits, loans, prices, taxes, and accounting and banking systems.
Therefore, Al-Baiji's statements acquire political and economic importance, if true, regarding referring the law to remove zeros to parliament.
The scenario suggests that the government may adopt a transitional period of up to two years to replace the old money with the new.
Economically, the two-year period seems closer to a gradual reform model than a sudden replacement model, as it gives banks, companies and citizens time to adjust their systems, accounts, contracts and cash transactions.
$250 million... what does it mean?
The figure mentioned by the congressman, which is $250 million as the value of the printing, needs to be read carefully.
The value of printing in dollars does not mean that the state will add $250 million to its reserves, nor does it mean that the value of the dinar will jump against the dollar by a similar amount.
According to statements attributed to the deputy, it is a cost or value associated with the process of preparing and printing the new banknotes.
The economic value of a currency is determined primarily by monetary policy, fiscal policy, the size of liquidity, reserves, inflation, economic activity, and public confidence in the banking system.
Herein lies the most important point: the success of removing zeros is not measured by the appearance of the new banknote, but rather by the ability of the central bank and the government to maintain monetary stability during the transition phase.
The central bank faces its toughest test yet.
The official website of the Central Bank of Iraq currently displays the banknotes in circulation and the legal frameworks related to the currency. The law also confirms that the Central Bank is the entity responsible for issuing currency.
This makes the central bank the key player in any large-scale currency replacement process.
If the law is passed, he will have to define practically:
The conversion rate between the two currencies.
New currency denominations.
Joint trading period.
Authorized banks and exchange centers.
Ceilings and mechanisms for replacing large sums of money.
Anti-money laundering and counter-terrorism financing measures.
The mechanism for dealing with cash funds located outside the banking system.
A plan to withdraw the old currency from circulation.
How to protect citizens from forgery and fraud.
The issue of large sums is of particular importance, especially since Al-Baiji’s statements spoke of a special mechanism for replacing old money, particularly large sums.
Why might two years be necessary?
If the new currency enters circulation, the biggest challenge will not be printing the paper, but managing the transition process.
Iraq has a highly cash-based economy, so withdrawing huge amounts of old dinars and replacing them with a new currency in a short period of time could create pressure on banks, exchange companies, and cash centers.
Adopting a transition period of up to two years could allow the process to be divided into stages.
From an economic standpoint, the state could begin by gradually introducing the new currency, while keeping the old currency valid for circulation for a specific period, then reducing its use until it is withdrawn completely.
However, the success of this mechanism depends on the transparency and clarity of the instructions for the public.
Removing zeros does not automatically mean an increase in the value of the dinar.
This point will be the most sensitive in the Iraqi market.
If, for example, the exchange rate before the removal of zeros reflected a certain value of the dinar against the dollar, then removing three zeros does not mean that the dinar has actually risen against the dollar.
The Central Bank of Iraq presented in its official data the price of the dollar at 1310 dinars per dollar in data published during 2026.
Therefore, renaming the monetary unit should not be confused with revaluing the currency.
The two decisions are completely different.
Removing zeros can make accounting, pricing, and financial data easier, but it does not by itself create new production, additional reserves, or an increase in purchasing power.
The real test: inflation and confidence
From a global economic perspective, currency reform succeeds when it is part of a broader program for financial and monetary stability.
However, if banknotes are changed without addressing inflation, budget deficits, or weak confidence in the banking system, the underlying problem will remain even if the numbers on the banknotes change.
Therefore, in the next phase, markets will be watching more than just the announcement of the new currency.
Fiscal policy will monitor the size of government spending, the growth of the money supply, foreign reserves, exchange rate stability, and the percentage of banking system use in payment transactions.
These indicators will be more important than the color or design of the banknote.
What does this mean for the citizen?
For the average citizen, the hypothetical scenario of removing zeros means that old money will not become worthless once the new currency is launched, provided a clear legal replacement mechanism is approved.
If the government adopts a two-year transition period as stated in the declarations, the replacement is expected to be gradual, in accordance with instructions issued by the competent authorities.
But citizens will need to be wary of the informal market, especially since any currency change usually creates a suitable environment for rumors and fraud, such as selling alleged banknotes as the “new currency” or claiming the existence of unofficial exchange rates.
Economic reading
If the law to remove zeros is indeed referred to the House of Representatives, then Iraq will have moved from the stage of study and discussion to the stage of possible legislation.
However, the process cannot be considered valid before the issuance of the law and official instructions from the competent authorities.
Here, a distinction must be made between three levels:
First: Printing or preparing new banknotes.
Second: Enacting a law that allows for the currency restructuring process.
Third: Actual implementation and currency exchange in the market.
Moving from level one to level three may take months or years, depending on the law and the timetable that the authorities will set.
The central bank itself, in the official pages we reviewed, did not publish any announcement specifying an official date for the removal of zeros or the launch of a new currency with these details. Furthermore, recent reports on the matter indicated that no implementation date has yet been announced.
Exclusive news… Confirming what was stated on “Nafs Ameeq” (Deep Breath): A member of the Finance Committee reveals the arrival of the law to remove the zeros and change [the currency]
0:00 This law — the Stolen Funds Recovery Law — is specifically for this issue. This law will return all the amounts now.0:07 We also have, for example, the currency change law coming — removing three zeros. This will also burn the buried money.0:16 Wait, wait, wait, wait… right now you’re going to burn the episode, not just burn it — you’ll burn the whole studio!0:22 [Laughter]0:24 This is also because he can’t return, for example, 100 billion or 50 billion. There will also be controls in it. This is the “yellow limit” law, Your Excellency the sleeper… yes.0:32 I want you to focus carefully with me. [Laughter] In an in-depth interview, in a special interview with the Minister of Communications, Mr. Mustafa Sanad.0:41 Yes, he mentioned this topic — he opened this subject. Yes, there was a big fuss. Yes… where did you get this talk from? There is no removal of three zeros, there is no currency change. The law exists — the law is ready. And we had our meeting, I told you, with the Governor of the Central Bank. There are 250 million dollars — meaning the currency is ready — they just need to pass the law.1:04
Because the government doesn’t have the authority to remove the zeros; only the Council of Representatives (Parliament) does. They will send the law, prepare it. Possibly in the coming weeks the law to remove the zeros will come.1:13 On the contrary, this law means they are printing new currency. We have it ready — they have prepared it. And they have currency amounting to around 250 billion dollars without zeros. After that, once the law is passed, we will remove the three zeros. This law, first of all, the amounts… from the state, maybe within two years.1:30 This issue, and there will be a mechanism and controls. When the law reaches you… it might reach us from us, because the law at the beginning came to Finance, then the Speaker of the Council of Representatives said no, it has to go back to the government, and the government will send it to us. This law and the Borrowing Law… meaning… take it, al-Halbousi… no, no, we haven’t received it.1:47
No, no, I mean it was draft… it came to us in Finance, then we returned it — it and the Borrowing Law — we returned them to the government. The government will send them in an official letter to the Presidency.1:56 If the Borrowing Law and the Currency Change Law… currency change and the Stolen Funds Recovery Law — three laws. Three very important laws.
These laws…2:04 …will now reach the Parliament. They will reach the Parliament.
***UPDATE somebody touched a nerve hahaha
The CBi tweeted this out
A statement from the CBi is what the words say on the image
link too late CBI the cat's front parts are out of the bag!
The Central Bank of Iraq has been monitoring media reports and statements regarding the printing of new Iraqi currency with zeros removed, purportedly for circulation. In this regard, we affirm that these reports are not based on any official source, and we deny that the bank has printed any new Iraqi currency with zeros removed. Furthermore, any future project related to restructuring currency denominations or removing zeros, should an official decision be made, will be subject to multiple legal, regulatory, and technical stages. Such a project will be announced, if approved, through the bank's official channels and various media outlets, along with a suitable transition period that allows citizens, banks, and institutions to exchange the currency safely and systematically, ensuring the full preservation of everyone's financial rights and obligations. The Central Bank of Iraq urges citizens and media outlets to rely exclusively on its official statements and channels for information related to monetary policy and to refrain from relying on unverified news, figures, or information, as its dissemination may cause confusion or harm to citizens' financial interests.
Central Bank of Iraq - Media Office
Want to Support My FX Buddies?
Fr$$ to You: Hit the thumbs up, subscribe, click the share button
: Economic and political circles in Baghdad are preparing to face a highly complex stage following the firm signals issued by US Treasury Secretary Scott Bisent regarding Washington’s intention to tighten the financial siege on Tehran and activate secondary sanctions mechanisms against entities and countries that are lenient in dealing with it.
The video for this My FX Buddies Blog is below here:
This clear move places Iraq at the heart of the circle of danger and direct risks due to the depth of its commercial and financial ties and intertwined partnership with neighboring Iran.
Particular attention is being paid to the energy sector and the financial dues resulting from the import of gas and electricity from Tehran, as Iraqi power plants rely vitally on Iranian supply to ensure the continuity of the national grid.
The Central Bank of Iraq faces a double challenge: protecting the domestic exchange market and controlling the outlets for hard currency transfers to ensure that it does not flow through unofficial channels that could provoke the ire of the US Treasury and lead to new restrictions on local banks.
Observers believe that the current situation does not allow for fleeting maneuvering, as any escalation in international compliance measures will immediately affect intra-regional trade and the prices of basic commodities within Iraqi markets. This puts decision-makers in Baghdad before bitter choices between full compliance with American requirements to protect the Iraqi banking and financial system from isolation, and maintaining delicate regional balances and the stability of the energy sector, which represents the most important lifeline for the Iraqi people.
The parliamentary legal committee submits 40 draft laws to the parliament's presidency.
link
The parliamentary legal committee confirmed on Monday that it had submitted about 40 draft laws to the Speaker of Parliament, while clarifying the constitutional and procedural differences between draft laws and proposals.
Committee member Thaer Al-Kaabi told the official agency, as reported by 964 Network , that “the committee has completed submitting approximately 40 draft laws to the Council Presidency to proceed with their legislation,” indicating that a number of them have been read, most notably the Lawyers Law and the Notaries Public Law, as well as the reading of the Minors Care Law, which are qualitative and important legislations targeting a wide segment of the Iraqi people.”
Al-Kaabi explained that “the draft law” is submitted exclusively by the government, represented by the Council of Ministers, and is linked to the executive vision, and its texts are restricted by the allocations and schedules of the federal budget,” noting in contrast that “the proposed law” is submitted from within the House of Representatives or from the Presidency of the Republic, in accordance with the legislative frameworks.
The First Deputy Speaker of Parliament told NINA: The Minister of Finance and the proposed loan law will soon be presented to Parliament.
aghdad / NINA / First Deputy Speaker of Parliament Adnan Faihan confirmed that Parliament is awaiting the discussion of the proposed loan law and the hosting of the Minister of Finance in upcoming sessions.
Faihan stated to the National Iraqi News Agency ( NINA ): "The Minister of Finance has officially requested to appear before Parliament to explain the financial crisis and the possible solutions proposed for implementation."
He clarified: "The date for this meeting will be included on the agenda of one of the upcoming sessions."
He added: "The proposed loan and grant law will soon arrive from the government and will be placed on the agenda of Parliament sessions to proceed through the legislative and legal process and be put to a vote."
Regarding the delay in completing the cabinet, Fayhan affirmed that "there is a general trend among the political blocs, the government, and parliament to finalize the cabinet formation, which we expect to reach the House of Representatives soon for a vote." He pointed out that the delay in voting on the remaining ministerial candidates is linked to several factors, including entitlements, such as the Ministry of Interior portfolio, for which a candidate has not yet been decided, as well as a Kurdish disagreement over who will occupy the position of Deputy Prime Minister and who will hold the ministerial portfolio.
"Leave the immediate solutions behind."
To maintain the strength of the currency, Fayhan calls on the central bank to refrain from knee-jerk reactions.
The First Deputy Speaker of the House of Representatives, Adnan Faihan, stressed today, Sunday (August 23, 2026), the need to deal with economic risks and challenges, away from immediate solutions and reactions, in a way that enhances market stability and maintains the strength of the national currency, indicating the parliament’s keenness to support policies and procedures aimed at enhancing financial stability.
The media office of the First Deputy Speaker of Parliament said in a statement received by 964 Network that “the First Deputy Speaker of the House of Representatives, Adnan Faihan, received today, Sunday, in his office, the Governor of the Central Bank of Iraq, Nizar Nasser, in the presence of the Chairman of the Parliamentary Finance Committee, Uday Awad, to discuss a number of economic and monetary files, and to discuss ways to enhance financial and monetary stability, in order to contribute to supporting the national economy and facing current challenges.”
According to the statement, Faihan stressed “the importance of adopting a balanced and effective monetary policy based on a proactive vision capable of anticipating changes and dealing with economic risks and challenges, away from immediate solutions and reactions, in a way that enhances market stability, maintains the strength of the national currency, and supports confidence in the banking sector.”
Faihan expressed “the Council’s keenness to support policies and procedures aimed at enhancing financial stability, and providing the necessary legislative and regulatory cover to address economic challenges in accordance with a clear vision and in line with the requirements of the national interest.”
Parliament supports the Central Bank's efforts to enhance monetary stability and pledges legislation to achieve these goals.
The president receivedHouse of RepresentativesHebat Al-HalbousiOn Sunday, the governor of the central bankNizar Nasser HusseinHe and his accompanying delegation, while emphasizing the importance of developing the performance of the banking sector and raising the efficiency of financial institutions.
A statement from the officeAl-HalbousiThe meeting discussed a number of issues related to monetary policy and the banking sector, and prospects for developing the financial system inIraq"
The president confirmedHouse of RepresentativesDuring the meeting, he expressed his support for the visions and directions adopted by the Central Bank, which contribute to strengthening monetary and financial stability, developing the performance of the banking sector, and raising the efficiency of financial institutions, in line with the requirements of the next phase. He stressed the importance of continuing to update and develop legislation related to banking and financial operations, in order to provide a suitable legal environment for implementing reforms and keeping pace with economic and technological developments.
He also indicated the Council's readiness to support the necessary legislative amendments that contribute to achieving these goals, noting the importance of accelerating the steps of digital transformation in the banking and financial sector and expanding the use of technology and digital financial solutions, in order to enhance financial inclusion and raise efficiency.Banking servicesThis will reduce cash transactions, contribute to enhancing transparency and combating money laundering, and curb manifestations of financial corruption.
He also emphasized the need to strengthen coordination between the legislative authority, the central bank, and relevant government entities to ensure unified efforts in addressing financial and banking challenges, supporting the investment environment, revitalizing the private sector, and achieving sustainable economic growth.
For his part, the governor of the central bank reviewed the bank's key directions and plans for developing the banking sector and enhancing digital transformation and financial services, stressing the importance of institutional and legislative cooperation to achieve the desired goals.
Iraq Finance Committee and CBI Discuss Crisis Resolution Strategies
Iraqi Parliamentary committee hosted CBI officials over the financial crisis.
Discussions focused on optimizing deficit-financing strategies and engineering proactive economic crisis solutions.
Agenda items included addressing public sector payroll delays, inflation metrics, and foreign exchange reserves.
The Iraqi Parliamentary Finance Committee hosted Central Bank officials on Sunday to discuss strengthening monetary policy, financing the budget deficit, and implementing reforms to resolve the financial crisis.
Key Statement and Focus Area
Lawmaker Uday Awad Kadhim stressed “the importance of establishing advanced mechanisms to strengthen monetary policy, support financial and monetary stability, and work on maximizing revenues to help boost the country's financial economy.”
The CBI Governor provided a detailed explanation regarding the bank’s direction in monetary policy for the upcoming fiscal years.
Uday Awad Kadhim chaired a meeting of the Finance Committee, during which the Governor of the Central Bank of Iraq, Nizar Nasser Hussein, the Deputy Governor, Shaimaa Abbas, and the senior staff were in attendance.
The high-level session focused on evaluating monetary frameworks, optimizing deficit-financing strategies, and engineering proactive fiscal solutions to navigate the ongoing economic crisis.
The committee reviewed inflation metrics, foreign exchange reserves, and the underlying factors causing public sector payroll delays.
The lawmakers evaluated the Central Bank’s revenue-generation strategy, foreign currency auction data, local exchange rates, and subsidized dollar distribution channels for travelers.
Additionally, the committee examined mechanisms for financing the budget deficit, including the possibility of lending to the government or discounting treasury bills to finance the deficit, along with its impact on the monetary system and the national economy.
The committee also examined deficit-financing options like government lending and treasury bill discounting to assess their impact on the national economy.
During the meeting, the CBI Governor detailed the bank’s monetary policy direction for upcoming fiscal years, outlining “mechanisms to maintain monetary stability, manage liquidity, and enhance the role of the policy interest rate, explaining the impact of monetary policy on economic activity and the importance of a gradual transition to support the real economy.”
Discussions examined banking sector development and structural economic reforms to bolster financial stability.
The panel further analyzed the Central Bank’s 2025 fiscal records to verify reserve sustainability and strengthen economic resilience.
FYI
Iraq is experiencing a severe fiscal crisis, shifting from a budget surplus to a 21.24 trillion IQD deficit in the first half of 2026.
This shortfall stems from regional disruptions in the Strait of Hormuz, which have bottlenecked southern crude oil exports. Consequently, falling revenues have caused lengthy public sector salary delays and widespread market stagnation.
While some officials are pushing for emergency measures like printing money, experts warn this could destabilize the country's current inflation rate.
Earlier, Lawmaker Dilan Ghafoor told Channel8 that the Iraqi Council of Representatives will conduct the reading of the Borrowing and Grants Bill of 2026, which defines the borrowing authorities of the Prime Minister and the Minister of Finance.
The Iraqi government is also reportedly seeking to pass a bill to delete zeros from the currency, aiming to restore liquidity to banks and activate the electronic system for financial transactions in the country.
Al-Halbousi affirms Parliament's readiness to support financial inclusion
Speaker of Parliament Hebat al-Halbousi and First Deputy Speaker Adnan Faihan al-Dulaimi discussed, in two separate meetings, with the Governor of the Central Bank, Nizar Nasser Hussein, ways to enhance financial and monetary stability and develop the performance of the banking sector in the country.
A statement issued by the media office of the Speaker of Parliament indicated that Speaker Halbousi received the Governor of the Central Bank and his accompanying delegation to discuss monetary policy and prospects for developing the financial system. The Speaker affirmed his support for the Central Bank's vision for modernizing legislation related to banking operations, expressing Parliament's readiness to support the necessary legislative amendments to accelerate digital transformation and expand financial inclusion, thereby reducing cash transactions and enhancing transparency, as well as combating money laundering and corruption. In a separate meeting, attended by the Chairman of the Parliamentary Finance Committee, Uday Awad, the First Deputy Speaker of Parliament, Adnan Faihan al-Dulaimi, received the Governor of the Central Bank to discuss economic matters and address current challenges.
Faihan stressed the importance of adopting a balanced monetary policy based on a proactive vision capable of dealing with risks away from immediate solutions, in a way that preserves the strength of the national currency and supports confidence in the banking sector, stressing the Council’s keenness to provide the necessary legislative and regulatory cover to protect the national interest and market stability.
Al-Zaydi: I have committed myself not to run for a second term, and our reform programs will bear fruit for future governments.
Prime Minister Ali Faleh al-Zaidi participated today, Friday, in a dialogue session as part of the Eighth Baghdad Dialogue Conference, held in Baghdad by the Iraqi Institute for Dialogue. During the session, al-Zaidi addressed a number of issues included in the priorities of the government program, which constitutes a roadmap for the government's reform and development plans and programs, particularly in the areas of the economy, energy, and services. He emphasized that the government's approach is based on building the state and the economy, especially since Iraq possesses the opportunities, resources, and will to overcome challenges and is moving towards becoming the most stable and powerful country in terms of development and the economy. The following are the highlights of the Prime Minister's remarks: We have secured salaries and found alternative routes for oil exports, and we will present a budget that represents a roadmap for Iraq's economic future. Employee salaries and government payments are secured, and we are proceeding with a plan to cover the coming years. Next year's budget will focus on the electricity sector in terms of production, distribution, and transmission, and on expanding the use of solar energy. All political forces agree on proceeding with the consolidation of weapons under state control and working on mechanisms for their surrender. There are no intentions or possibilities of any military confrontation, and we will not allow Iraq's enemies to exploit any opportunity. The presence of weapons outside the control of the state creates a hostile environment for investment, and this is unacceptable as it is not in the interest of the Iraqi people. There will be no retreat from combating corruption, and the government enjoys broad support from political forces. The root of corruption lies in the inflated pricing of contract items and projects. We have implemented reforms in managing domestic fuel consumption, and we will achieve financial savings of 17.8 trillion dinars over the course of a year. We are working to expand oil exports through the Turkish port of Ceyhan, and there are also plans to export via Banias and Aqaba. We are working to increase Iraq's export quota through OPEC, and we aim to reach 8-10 million barrels per day within six years. Iraq fought ISIS on behalf of the region and the world, and it is only fair that it receives an oil export quota commensurate with its population size and oil reserves. I have committed myself not to run for a second term, and our reform programs will bear fruit for future governments. The capital of the Development Fund will be $100 billion, and we will rely on contributions from the Central Bank, public subscription, and contributions from international and regional financing institutions. Without the support of the private sector, there will be no development, and we are working to establish mechanisms that encourage migration from the public to the private sector. The project for one million residential plots will be launched very soon, targeting citizens who do not own any property or residential land. The last citizen will receive their plot within the million-plot residential project in less than three years. The National Investment Commission will announce opportunities for residential plots with a modern design that takes into account future expansion. We have directed the development of a plan to provide agricultural plots for agricultural engineers and veterinarians, and we will provide them with loans according to a well-studied economic model. Tax revenues will be collected in advance on imports, and transfers will be permitted. This will generate revenue for the state, and the amounts can be refunded if the import transaction does not take place. We reduced customs duties on some goods to facilitate the proper payment of revenue to the state. The post-audit system is no longer suitable; we have adopted pre-audit and price controls before contracts are signed. Iraq is an important country in the region, and we cannot sever ties with its Arab and regional neighbors. We have witnessed a strong desire to engage with Iraq. We support transforming Iraq's role from an arena of conflict to a bridge for negotiation and understanding, and our country's influence is significant and crucial to the stability of the region.
Iraq's economy: From excess liquidity to pressures to finance salaries; banks face a difficult test.
Iraq is facing increasing pressure on its ability to finance government spending as part of its oil exports through the Strait of Hormuz remain disrupted. While large foreign reserves and a banking sector that still enjoys relatively high liquidity give Baghdad room to maneuver, they do not address the growing imbalance in public finances.
The regional war and restrictions on navigation in the Strait of Hormuz, through which the majority of Iraq’s oil exports from southern ports pass, have reduced crude flows, hitting the main source of state revenue in an economy where oil accounts for about 88 percent of government income, according to data reported by Reuters.
Iran said on Saturday that it had allowed a number of Iraqi oil tankers to pass through the Strait of Hormuz following discussions with Baghdad, but shipping traffic in the waterway remains far below pre-war levels. Meanwhile, the Iraqi government is seeking to increase exports via Turkey and revive or establish new outlets toward Syria and Jordan, projects that will not provide a quick alternative to exports from the south.
These financial developments in Iraq are putting the country to a test that began before the current crisis.
The International Monetary Fund estimated the budget deficit at about 4.2 percent of GDP in 2024, up from 1.1 percent the previous year, and said that increased spending on wages, pensions and energy and financing constraints had led to the accumulation of domestic arrears of nearly 14 trillion dinars.
The price of oil needed to balance the budget also rose to about $84 a barrel in 2024, from about $54 in 2020, making public finances more sensitive to any decline in production or exports.
The IMF had warned in July 2025 that continued expansion of spending, particularly the wage bill, would increase financing and debt risks unless the government boosted its non-oil revenues and controlled current expenditures. At that time, it estimated that wages and pensions would amount to about 24 percent of GDP in 2025.
The disruption to exports in 2026 added pressure that was not factored in as severely in those estimates.
Baghdad began talks in the spring with the IMF and the World Bank to obtain financial assistance after the war slashed oil revenues, according to Iraqi sources and a source close to the IMF quoted by Reuters in May.
The pressure on the Ministry of Finance does not mean that Iraq is currently facing a banking crisis in the traditional sense.
Central Bank data shows that banking sector deposits reached 122.88 trillion dinars at the end of 2024, down from 133.50 trillion dinars in 2023, a decline of 7.95 percent, mainly concentrated in current deposits.
In contrast, the capital of banks operating in Iraq rose to 20.72 trillion dinars at the end of 2024, an increase of 8.7 percent over the previous year, while the Central Bank said that the rise in capital strengthened the banks’ ability to absorb losses and shocks.
Prior to the current crisis, the banking sector's problem was more of an excess of liquidity and poor investment of funds than a shortage of them.
IMF data shows that excess liquidity in the banking system remained high during 2024 and the beginning of 2025, while the Fund called for developing central bank tools to manage liquidity and improve the transmission of monetary policy to credit and the real economy.
This means that the pressures the government faces in meeting its obligations cannot be directly measured by the amount of money available in banks.
Furthermore, the central bank's reserves do not represent a balance that the Ministry of Finance can use directly to cover salaries.
Foreign reserves reached $100.3 billion at the end of 2024, a level the IMF said covered more than 12 months of imports. In March 2026, following an extraordinary meeting of its board of directors to discuss financial developments, the central bank stated that it continued to monitor the banking system's liquidity and foreign currency needs, and to ensure the smooth flow of external transfers.
The bank has previously explained that foreign reserves are not “excess funds,” but rather represent a cover for the local currency and a tool to finance balance of payments needs and maintain exchange rate stability.
Under normal circumstances, the Ministry of Finance obtains dinars by selling a portion of its dollar-denominated oil revenues to the Central Bank. Therefore, the decline in export revenues puts pressure on government spending, even though the Central Bank's reserves remain high.
This distinction between the Treasury's position and the Central Bank's position is important when assessing the government's ability to continue paying salaries.
If revenues fall short of expenditures, the government can resort to domestic borrowing, postpone some spending, or accumulate arrears, but the continuation of these options for a long period increases banks’ exposure to government debt and limits the funds available to the private sector.
The IMF warned against resorting to monetary financing of the deficit, due to the pressures it could cause on inflation, reserves, and the exchange rate.
This warning becomes even more crucial given the increasing size of fixed government obligations. Wages and pensions do not adjust quickly to lower oil revenues, meaning that when revenues fall short, the government is usually forced to reduce or postpone investment and other expenditures before touching salaries.
Iraq had already recorded this pattern before the war, when funding constraints in 2024 led to an accumulation of arrears in the energy sector and investment projects instead of a similar reduction in current spending.
The trajectory of oil exports in the coming months will determine the extent of the pressure more than the level of crude oil prices alone.
Brent crude surpassed $90 a barrel in August, but higher prices do not fully compensate Iraq if its oil export capacity remains low. Reuters reported that oil traffic through the Strait of Hormuz has declined sharply since the war began, with navigational risks in the region persisting.
The data available so far does not show any signs of a widespread bankruptcy crisis in Iraqi banks or a wave of deposit withdrawals threatening the banking system.
However, a prolonged government funding gap could change the picture if the state becomes more reliant on banks to buy debt, or if government deposits decline or arrears widen.
Therefore, monthly oil export data, domestic borrowing, deposit volume, bank liquidity and foreign reserves will be more important during the remainder of the year than the nominal figure for reserves alone.
Iraq currently has large reserves and a banking system that has not shown signs of a general liquidity crisis, but the government faces a different problem: financial flows that are highly dependent on a single resource that has suffered a sudden shock.
The longer the disruption to oil exports continues, the less distance there is between budgetary pressures and the rest of the financial system.
Want to Support My FX Buddies?
Fr$$ to You: Hit the thumbs up, subscribe, click the share button
The British website "Food Navigator" stated that Iraq's role as a regional manufacturing hub for "PepsiCo" is increasing, as despite the ongoing turmoil in the Middle East, the company is doubling down on expanding its regional production.
The British website specializing in food affairs explained in a report translated by Shafaq News Agency that despite the dominance of war news in Iran throughout 2026, with no end to the conflict in sight, life and business continue as normal in other parts of the region.
The website cited Iraq as an example in its report, describing it as a long-standing center of conflict-related news throughout the first decade of the 21st century, and that despite its proximity to the center of the war in Iran, the country is emerging as a potential new manufacturing hub, attracting attention even from major brands like PepsiCo.
The report highlighted Iraq’s clear advantages, such as its geography, large youth population, and high access to locally produced food components, according to the FAO, including many staple crops, as well as dates, fruits, tomatoes, potatoes, and animal protein.
The report quoted the company's CEO for the Middle East, North Africa and Pakistan, Ahmed Al-Sheikh, as saying during the recent US-Iraq Business Summit, "As one of the historical agricultural centers in the region, we want to support Iraq's agricultural and industrial capabilities to become a center for food exports."
The sheikh continued, according to the report, that there is an opportunity "to explore the possibility of developing the food manufacturing sector in Iraq and strengthening the agricultural sector in the country, with the start of strong food manufacturing," adding, "We hope to create opportunities that benefit farmers and local industry while supporting products proudly made in Iraq."
According to the British report, this is not the company’s only project in Iraq this year, as the company also signed a memorandum of understanding with Baghdad Soft Drinks Company (BSDC) with the aim of boosting local production capacity to exceed 250 million products annually.
The report noted that PepsiCo relies on a partnership that has existed since 1984. The report quoted a company statement saying that "this memorandum of understanding reflects PepsiCo's confidence in Iraq's industrial future and supports local employment and manufacturing."
The report quoted Mohammed Shalabiya, CEO of Middle East and Africa Beverages, as saying that the company considers Iraq a key player in beverage manufacturing in the region, explaining that the shared ambition includes exploring potential opportunities related to expanding manufacturing capacity and enhancing Iraq's role as a leading beverage production hub in the Middle East.
However, the report highlighted several challenges facing Iraq with regard to manufacturing, including cold storage facilities, stable electricity supplies, as well as transportation logistics and timing.
MP: Washington seeks to dominate Iraq and usurp its national decision-making power
MP Murtadha Ali affirmed on Monday that the United States seeks to impose its hegemony on Iraq and influence its national and sovereign decisions, stressing the need to put an end to American interference in the country's internal affairs. Ali told Al-Maalouma that "America wants to dominate Iraq and usurp its national and sovereign decision-making," explaining that "the continued American interference in Iraqi affairs constitutes a violation of the country's sovereignty and an attempt to influence its national decisions."
He added that "Iraq possesses constitutional and sovereign institutions capable of managing its affairs and making decisions in accordance with its national interests," noting that "any external interference in internal matters cannot serve the country's stability or preserve its independent decision-making."
Ali called on the Prime Minister to "put an end to American transgressions and interference in Iraqi affairs," and to take a clear stance that preserves Iraq's sovereignty and the independence of its decisions, stressing the importance of preventing any attempts to impose dictates or influence the state's direction.
He emphasized that "the current stage requires protecting national decision-making and strengthening Iraq's independent position, far removed from any external pressures or interference."
Earlier, retired Brigadier General Adnan al-Kinani, a security expert, warned of foreign plots against the Popular Mobilization Forces and the resistance to serve the Zionist project, noting that America, the occupying entity, and their allies are seeking to erase Arab identity and implement a plan called the Greater Middle East Map.
Badr Parliamentary Committee: The cabinet will be completed within the next two weeks.
The spokesperson for the Badr parliamentary bloc, Hamid al-Moussawi, revealed on Monday the date for the vote on the remaining cabinet positions, confirming that the government formation will be completed within the next two weeks.
Al-Moussawi told the Information Agency, "The vote on the remaining cabinet positions will take place within the next two weeks after the political forces finalize their understandings and discussions regarding the remaining ministries."
He added, "There is a serious commitment from all political parties to resolve this issue and not leave it unresolved, especially since the current phase requires a complete cabinet capable of performing its duties and bearing its responsibilities."
Al-Moussawi pointed out that "completing the cabinet is an important step to enable the government to implement its program and address issues that require swift decisions and actions," emphasizing that "political understandings are ongoing to reach a final agreement on the remaining names and portfolios."
He stressed the necessity of "resolving political differences and prioritizing the public interest to ensure the completion of the government formation within the specified timeframe and to allow state institutions to operate more effectively."
Will the (Sudanese-Amiri-Maliki) committee succeed in passing the “weapons management” instead of disarming them?
The deliberations of the Baghdad Dialogue Conference revealed a remarkable shift in the arms issue, with a clear retreat from dealing with September 30 as a final date for restricting weapons to the state, while a trend emerged to deposit the factions’ weapons in the Popular Mobilization Forces’ warehouses instead of the army, which means that missiles and drones will remain within a system led by Abu Fadak al-Muhammadawi, a leader in the Kataib Hezbollah and deputy head of the Popular Mobilization Forces.
Meanwhile, Prime Minister Ali al-Zubaidi appeared more frustrated than ever, expressing his wish that "time would fly by" to hasten the end of his term, while denying any intention of seeking a second term. On the issue of corruption, his striking statement was that Iraq no longer has money for corrupt officials to steal, alluding to the months-long halt in oil exports.
The data indicates that the forces of the Coordination Framework and the leaders of the Popular Mobilization Forces are trying to contain the situation by granting the government the right to conduct surprise inspections of the Popular Mobilization Forces’ warehouses, with the possibility of counting missiles and drones and verifying that they are not being used outside the decision of the Commander-in-Chief of the Armed Forces, in a settlement that seems closer to monitoring weapons than handing them over.
Following the visit of Iranian Parliament Speaker Mohammad Baqer Qalibaf to Baghdad, a committee comprising Hadi al-Amiri, Mohammed al-Sudani, and Nouri al-Maliki moved within the coordination framework to discuss the fate of the factions' weapons, amid messages from armed forces seeking a formula to prevent sliding into a direct confrontation.
Deputy Speaker of Parliament Adnan Faihan affirmed that weapons would remain under the command of the Commander-in-Chief, denying the possibility of a "Shia-Shia war" and indicating that the leaders of the framework had been tasked with organizing the inventory of weapons. However, he emphasized that weapons would be stored within the Popular Mobilization Forces' depots, as they are part of the state, thus making the core of the crisis related to the control mechanism, not merely the storage location.
The most controversial proposal involves registering all faction weapons with the Weapons Inventory Committee, granting the government and the committee the right to jointly inspect warehouses operated by the Popular Mobilization Forces and the factions. Meanwhile, negotiations continue to avoid addressing the issue of individuals and elements affiliated with the factions, leaving one of the most sensitive aspects of the weapons issue outside the current settlement.
More Maliki interference
The cabinet will not be completed before September 30th.
Political positions in exchange for disarmament: Maliki's coalition proposes and rejects the creation of four parliamentary seats for al-Zaydi.
Member of Parliament Duha al-Qusayr, from the State of Law Coalition, revealed on Monday (August 24, 2026) the names of candidates for the Ministries of Interior and Higher Education, confirming that her coalition had secured the Ministry of Health and that two ministries remained within its government entitlement. In an interview with journalist Mona Sami, which was monitored by 964 Network , al-Qusayr stated that the political blocs had submitted lists of three names for each ministry to the Prime Minister, leaving the final selection to him. She suggested that the cabinet formation would likely be delayed until after September 30 – the date set by the government for disarmament and the withdrawal of the international coalition. Al-Qusayr also discussed a proposal to create four deputy prime minister positions, rejecting it as a political appeasement. She called on the government to submit the Popular Mobilization Forces (PMF) law and to restrict weapons through agreements that would grant political benefits to those who surrender them.
Al-Qasir said, “The political blocs sent lists containing three names for each ministry to the Prime Minister, including candidates from the State of Law Coalition for the Ministries of Interior and Higher Education, as it is the largest Shiite bloc in the House of Representatives after the withdrawal of MPs from the Reconstruction and Development Coalition.”
Al-Qasir added that “the State of Law coalition is entitled to three ministries, of which the Ministry of Health has been decided, leaving the Ministries of Interior and Higher Education,” explaining that “the coalition submitted three names for the Ministry of Interior: Qasim Atta, Yasser Al-Maliki, and a military figure, while the list for the Ministry of Higher Education included three names, among them Amer Al-Khaza’i, with the final choice left to the Prime Minister.”
She noted that “the idea of splitting the Ministry of Culture, Tourism and Antiquities into two ministries (a Ministry of Culture and a Ministry of Tourism) is circulating in political circles and is part of the ongoing negotiations to resolve the crisis, without reaching a formal agreement so far,” pointing out that “the Hasm Alliance has not submitted its candidates for the Ministry of Defense, as well as not submitting candidates for the Ministry of Labor and Social Affairs until this moment, with the possibility of delaying the cabinet’s formation until after September 30.”
Al-Qasir criticized the proposal to create four deputy prime minister positions, considering that “going towards appeasing political blocs contradicts previous experiences of reducing ministries and burdens the state in light of the crisis of providing salaries and entitlements for the wounded of the Popular Mobilization Forces and the families of martyrs, and that the criterion should be limited to electoral entitlement and the points system.”
Regarding the security and legislative file, Al-Qasir indicated that “restricting weapons to the state requires understandings, negotiations, and realistic plans that grant those who surrender their weapons political entitlements,” stressing “the need for the government to send the Popular Mobilization Forces Law, and for the Sunni and Kurdish components to be present to provide national cover for the legislation, based on the common Iraqi position and the sacrifices made since 2014.”
Representative of the Supreme Leader and the Assembly of Experts
Khamenei's large delegation is in Baghdad and enters the coordination framework meeting.
The leaders of the Coordination Framework in Baghdad received Ayatollah Mohsen Qomi, the special representative of the Iranian Supreme Leader, along with a large delegation from the Assembly of Experts, which is considered the highest political and religious body in Iran that selects, monitors, and has the right to dismiss the Supreme Leader.
The Coordination Framework said in a statement, a copy of which was received by Network 964 , that “the leaders of the Coordination Framework in Baghdad received Ayatollah Mohsen Qomi, the special representative of the Leader of the Islamic Revolution, and the high-level delegation from the Assembly of Experts of the Leadership.”
The statement added that “during the meeting, which was held in Humam Hamoudi’s office with the participation of Iraqi Prime Minister Ali al-Zaidi, a number of issues of common interest were discussed.”
The statement noted that “the meeting was attended by Mr. Ammar al-Hakim, Nouri al-Maliki, Qais al-Khazali, Adnan Faihan, Amer al-Fayez, Mohsen al-Mandalawi, and Hadi al-Amiri, along with a number of Iraqi political leaders.”
In front of Khamenei's eyes... Al-Zaydi's framework: Do not repeat the Popular Mobilization Forces' arrests
An informed source revealed on Tuesday the behind-the-scenes details of the meeting of the Coordination Framework Forces, which was attended by the representative of the new Iranian Supreme Leader, Mohsen Qomi, where the issue of arrests targeting leaders in the Popular Mobilization Forces topped the agenda.
The source told Shafaq News Agency that the meeting was held Monday evening at the home of the head of the Supreme Islamic Council, Humam Hamoudi, in the presence of Prime Minister Ali Faleh al-Zaidi and leaders of the coordination framework, and witnessed a discussion of developments in the security situation in particular.
According to the source, the attendees stressed that "the arrest of any wanted member of the Popular Mobilization Forces does not require the use of military force, but can be done through an official notification that obliges him to appear before the judicial authority or the concerned authority."
The leaders of the framework also expressed their displeasure and annoyance at the method of arrests targeting some leaders of the Popular Mobilization Forces, and demanded that al-Zaydi take measures to prevent the recurrence of such operations in a manner that could be understood as provocative, according to the source.
According to the source, the representative of the new Iranian Supreme Leader, Mohsen Qomi, attended part of the meeting, with the aim of introducing his official identity to the Iraqi government and religious and political leaders, within the framework of what the source described as "what is customary and the requirements of the job."
He pointed out that Qomi informed the leaders of the framework that the head of the Supreme Islamic Council, Humam Hamoudi, had been appointed as a "link" between Iran and Iraq, noting that the representative of the Iranian Supreme Leader left the meeting shortly afterward, and did not attend all the details and topics of the meeting.
The source concluded by saying that "the difficult security situation that Iran witnessed during the past period delayed the visit of the new Supreme Leader's representative to Baghdad," before the visit took place at this time.
Prior to the meeting, the leaders of the framework received Ayatollah Mohsen Qomi, the special representative of the Iranian Supreme Leader, along with a large delegation from the Assembly of Experts, which is considered the highest political and religious body in Iran that selects, monitors, and has the right to dismissthe Supreme Leader.
Thanks
.jpeg)
