Mounting financial pressures threaten the 2026 budget.
link
The government faces an early challenge in preparing the 2026 budget, amid declining oil revenues and escalating financial pressures, which puts it in front of limited options between presenting an austerity budget or temporarily continuing spending according to the 1/12 rule. Meanwhile, economic experts and specialists believe that the 2026 budget will face major financial challenges due to declining revenues, which may push it to reduce spending or postpone its approval.
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Budget preparation
Nermin Maarouf, a member of the Finance Committee in the previous parliamentary session, confirmed in an interview with Al-Sabah that the government, if formed soon, still has time to submit the draft budget law, noting that its approval in previous years was often delayed until May or June.
She added that the preparation of the budget in Iraq traditionally relies on simple items based on the allocations of the previous year, but she pointed out that there is no legal basis that allows for continued spending according to the (1/12) rule for two consecutive years in the absence of a budget.
compound impact
For his part, crisis management expert Ali Al-Fariji believes that the 2026 budget is no longer just a matter of timing, but a test of the state’s ability to deal with a “compound shock” that includes a decline in oil revenues and export disruptions as a result of regional tensions, in addition to the continued rise in operational spending within an economy that is almost entirely dependent on oil.
Al-Fariji explained in an interview with “Al-Sabah” that preparing a budget in the near term seems unlikely, due to the absence of stable assumptions related to oil prices and export levels, which suggests that the (1/12) rule will continue to be used temporarily until the financial vision becomes clear.
dependence on oil
He added that the main challenges are structural in nature, most notably the dependence of revenues on oil by nearly 90%, the high operating expenses which account for more than 70% of total spending, as well as cash pressures and weak efficiency of investment spending.
Oil revenues
In the same context, economist Jalil Al-Lami confirmed in an interview with Al-Sabah that the option of submitting a full federal budget seems difficult in the short term, suggesting that the (1/12) rule will continue to be used temporarily, especially with the clear decline in oil revenues.
Al-Lami pointed out that Iraq used to rely on oil exports of around 3.5 million barrels per day with monthly revenues ranging between 7 and 9 billion dollars, before they decreased to about 2 billion dollars or less at some times, while the country needs at least 8 to 10 billion dollars per month to cover operating expenses, creating a financial gap that may reach 6 billion dollars per month.
Austerity budget
Al-Lami predicted that if the budget is prepared, it will be an austerity budget, based on an oil price between $60 and $65 per barrel, with a total size between 130 and 150 trillion dinars, and an expected deficit between 20 and 30 trillion dinars, which is subject to increase depending on
Regarding developments in the oil market.
He added that the anticipated budget will not include an expansion in appointments or the launch of new projects, but will focus on completing existing projects and securing basic expenditures, with the possibility of resorting to internal borrowing or drawing from the cash reserve in the event that the crisis continues.
Temporary disbursement
He pointed out that “estimates indicate that the 2026 budget will either be a deferred budget managed through temporary spending, or an austerity budget focused on containing the crisis, at a time when the Iraqi economy is facing a real test to readjust the spending model and avoid slipping.”
Towards a liquidity crisis in the near term.
The parliamentary finance committee expressed its position on borrowing from the central bank to finance domestic expenditures, noting that this issue is linked to the formation of the government.
Borrowing proposal
Committee member Ribwar Karim told the Iraqi News Agency, as reported by Al-Sabah newspaper, that "the proposal to borrow from the Central Bank to finance domestic expenditures is on hold."
On forming the government.
He added that "there is a conviction among the political parties and blocs that there are serious attempts to appoint the next prime minister As soon as possible.
He explained that “if a government is formed, there will be no need to borrow, as a fully empowered government will begin its duties,” noting that “borrowing from the Central Bank is merely an opinion put forward by some members of parliament.”
He stated that “this proposal is primarily linked to the formation of the government, and if that happens, there will be no need for this proposal.”
Trump: What happened in Iraq is "very good" and I'm happy with the prime minister-designate.
US President Donald Trump said on Saturday that recent developments in Iraq were “very good,” expressing his satisfaction with the selection of the Iraqi prime minister-designate, in a further sign of Washington’s support for the new Iraqi leadership.
Trump said in a press statement followed by “Iraq Observer”, “What happened in Iraq is very good and I am happy with the prime minister-designate”, adding: “We are supposed to receive a response from Iran tonight.”
Trump had invited Iraqi Prime Minister-designate al-Zaidi to visit Washington following the formation of the new government, stressing the US administration’s desire to strengthen bilateral relations and security and economic cooperation between the two countries.
The US president also stressed his country's support for the formation of an Iraqi government capable of building a better future for Iraq, free from terrorism.
Al-Zaidi is the first independent Iraqi prime minister from outside the ruling political class since 2003.
Bloomberg: Aramco and ADNOC successfully transported oil shipments through the Strait of Hormuz
Bloomberg reported that Saudi Aramco and the UAE's ADNOC were able to smuggle oil shipments through the Strait of Hormuz using methods of concealment .
This comes amid increasing turmoil in the strait since tensions between the United States and Iran erupted in late February, raising risks to maritime traffic .
Al-Zidi and Al-Kadhimi discuss the political situation and the formation of the next government.
The Iraqi Prime Minister-designate, Ali Faleh al-Zaidi, met today, Saturday, with former Prime Minister Mustafa al-Kadhimi.
During the meeting, the overall situation in the country was discussed, and a number of issues related to Iraq’s interests were discussed, in addition to emphasizing the importance of coordination and cooperation between political forces in order to form a comprehensive national government capable of facing various challenges, meeting the requirements of the current stage, and enhancing stability and serving the aspirations of citizens throughout the country.
Both sides stressed the need to unify efforts and support the path of national solutions in order to ensure the stability of the political and economic situation
in Iraq.
here:
https://www.youtube.com/watch?
Al-Zaydi: Coordination is necessary to form a comprehensive government
The Prime Minister’s Media Office stated in a statement received by Noon News Agency that the meeting discussed the overall general situation in the country, and addressed a number of issues related to the country’s interests, as well as emphasizing the need for coordination and cooperation to form a comprehensive national government capable of facing various challenges and meeting the requirements of the current stage, in a way that enhances stability and serves the aspirations of citizens.
Al-Kadhimi: Strengthening political stability and prioritizing dialogue
For his part, former Prime Minister Mustafa Al-Kadhimi stressed the importance of strengthening political and institutional stability, and working in the spirit of the state and national responsibility, in order to meet the aspirations of Iraqis for security, services and economic reform.
Al-Kadhimi stressed, according to a statement from his office received by Noon News Agency, the need to prioritize dialogue and understanding among national forces, and to protect state institutions and consolidate their prestige.
Wishes and support for the formation of a government capable of meeting aspirations
Al-Kadhimi expressed his wishes to the Prime Minister-designate for success in performing his duties in forming a government that meets the aspirations and challenges, serves Iraq’s higher interests, and preserves its sovereignty and stability.
He affirmed his support for every effort that would strengthen national unity and fortify the country against various challenges.
Eco Iraq Observatory: 70% of the government curriculum is copied from the “White Paper”
The Eco Iraq Observatory announced on Friday that more than 70% of the axes of the government’s economic program for the prime minister-designate are based on ideas and contents contained in the “White Paper” for economic reform presented by the previous government in 2020.
The observatory stated in a statement received by “Roj News” that “many paragraphs of the government’s economic program are directly inspired by the contents of the White Paper that was presented during the time of former Prime Minister Mustafa Al-Kadhimi.”
He added that “the similarity is not limited to general titles, but includes similar terms and themes such as (digital transformation, electronic signature, support for the private sector, reform of the banking sector, and smart networks).”
The observatory noted that “the government program did not provide clear mechanisms to address the rentier economy or reduce the bloated public sector, which constitutes an increasing burden on the general budget, nor did it address in detail the tools for addressing the financial deficit or how to confront the shocks associated with fluctuations in oil prices and the decline in exports.”
General Petraeus will be in Baghdad soon.
The Middle East newspaper quoted sources as saying that "General David Petraeus, the former commander of the US Central Command, which is responsible for the Middle East region, and the director of the US Central Intelligence Agency, the CIA, may visit Baghdad this week to ensure that the new government will completely sever its ties with armed groups."
It was not possible to verify the official capacity that the American general would hold during his alleged visit to Baghdad.
Petraeus is considered one of the most prominent commanders whose name is associated with the war in Iraq after 2003. He gained his experience through multiple field and strategic roles, most notably his command of the 101st Airborne Division during the invasion that toppled Saddam Hussein's regime.
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An Iraqi committee is exploring mechanisms for
disarming factions amid escalating US pressure.
The Asharq Al-Awsat newspaper, quoting Iraqi political sources, revealed the formation of a high-level Iraqi committee tasked with preparing an executive project for disarming armed factions, in preparation for presenting it to American officials in the coming days, amid escalating American pressure on Baghdad regarding the issue of weapons and Iranian influence within Iraq.
According to the sources, the committee held unannounced meetings during the past period with leaders of armed factions to discuss mechanisms for disarmament and reintegration of some elements into the civilian and security state institutions, but some of those meetings witnessed tension and objections from parties that refuse to give up their weapons.
The information indicated that the committee is operating under a mandate from forces within the coordination framework, at a time when political warnings are increasing that the anticipated government headed by Prime Minister-designate Ali Faleh Kazem al-Zaidi may face major challenges in implementing reforms related to the issue of weapons and financial resources, which Washington accuses some Iraqi parties of smuggling to Iran.
According to the report, the US administration has shown support for al-Zaidi since his appointment, but it links the continuation of this support to making tangible changes related to reducing the influence of armed factions within Iraqi state institutions.
The newspaper also quoted officials and political sources as saying that the proposed project includes the disarmament of heavy and medium weapons and the restructuring of some formations of the Popular Mobilization Forces, amid doubts about the ability of the next government to actually implement these steps, with the likelihood that some of the current moves are an attempt to absorb American pressure and buy time.
In contrast, sources representing a number of armed factions confirmed their refusal to hand over weapons, believing that American pressure would not push them to back down from their positions or change the existing power equations.
In parallel, an informed source revealed an agreement between forces within the coordination framework and the prime minister-designate to form a special committee to restrict weapons to the state, which includes, in addition to al-Zaydi, Prime Minister Mohammed Shia al-Sudani, and the head of the Badr Organization, Hadi al-Amiri.
The source explained that the committee will develop practical mechanisms to regulate the weapons file and reintegrate some elements of the factions into civilian or security institutions, in line with the requirements of the current stage and the political and security challenges facing the country.
Washington's pressure is unsettling Tehran; the coordination framework is delaying the formation of al-Zidi's government amid fears of internal Iraqi
unrest.
The formation of the new Iraqi government has entered a highly sensitive phase, following political leaks that revealed urgent Iranian messages sent to the leaders of the Coordination Framework, urging them to be patient and not rush to grant confidence to the government of Prime Minister-designate Ali Faleh al-Zaidi, in light of what sources described as the "ambiguous moment" that accompanied the nomination process, amid escalating talk of American interventions and pressures that tipped the scales in favor of al-Zaidi at the expense of other competitors within the Shiite bloc, a man who is unknown and has no clear political or popular affiliation.
According to informed sources who spoke to “Iraq Today”, the Iranian reservations are not only related to the method of assignment, but also to what Tehran describes as “sensitive pledges” that may have been made to the American side, which include highly complex files that affect the future of security and political balances in Iraq, most notably the restructuring or dissolution of some formations of the Popular Mobilization Forces, in addition to imposing restrictions on armed factions and subjecting them to a new security system, or clashing militarily with them.
Sources believe that these pledges and signals, some of which were included in al-Zaydi’s government program, represent a dangerous shift in the nature of the relationship between Baghdad and Washington, and may open the door to an unprecedented internal clash, especially since the armed factions consider any attempt to undermine their weapons or influence as a direct attack on them and their political and military project.
In a notable development, sources indicated that al-Zaydi has not yet presented a clear vision regarding the shape of Iraq’s foreign relations in the next stage, which has raised concerns within the Coordination Framework forces about a repeat of what happened in Lebanon with Nawaf Salam’s government, which – according to the sources – began with an escalating rhetoric towards Hezbollah and its institutions, which pushed the country into further division and political and security tension, and Lebanon now stands on the brink of collapse, and there is a clear siege of the Shiite political forces.
Sources confirm that the concerns are no longer limited to Iraqi forces alone, but now include regional parties who fear that passing the al-Zaydi government in its current form will lead to a direct confrontation within Iraq, which may affect the unity of the coordination framework itself, and open the door to sharp Shiite divisions at a very dangerous time.
According to the same information, leaders within the coordination framework have actually begun to recalculate their political positions, taking a step back from proceeding quickly with holding a confidence vote session, pending clarification of the regional and international understandings surrounding the new government.
The Secretary-General of Parliament: The date for the vote on the cabinet will be set for next Monday or Tuesday.
Al-Jarjari said in a press statement that: “The House of Representatives has completed all preparations for holding the session to vote on the cabinet,” indicating that “it has been customary in previous government voting sessions to send invitations to political and diplomatic leaders, and things will become clearer tomorrow.”
He added that "tomorrow will see the start of sending invitations to the political leaders, the coordinating framework and the political council," stressing that "we are waiting for the Speaker of Parliament to set a date for the session, whether it will be on Monday or Tuesday."
Trump: What happened in Iraq is good, and I am happy with the prime minister-designate.
US President Donald Trump affirmed on Saturday that what happened in Iraq was very good, expressing his satisfaction with the Iraqi Prime Minister-designate, in a new indication of Washington's support for the new Iraqi leadership.
Trump said in a press statement followed by Al-Masalla that what happened in Iraq was very good and that he was happy with the prime minister-designate, adding: We are supposed to receive a response from Iran tonight.
Trump had invited al-Zaidi to visit Washington following the formation of the new government, indicating the US administration's desire to strengthen bilateral relations and security and economic cooperation between the two countries. He also emphasized Washington's support for the formation of a government capable of building a better future for Iraq, free from terrorism.
An Iraqi committee is negotiating with factions over the handover of weapons, and Washington is linking its support for al-Zaydi's government to the completion of the mission.
Baghdad is moving under escalating American pressure towards opening the most sensitive files in years, with the revelation of information about a high-level Iraqi committee comprising three figures tasked with preparing an “executive project” to disarm armed factions and restructure the “Popular Mobilization Forces”, in preparation for presenting it to American officials within days, amidst sharp political division and widespread skepticism about the possibility of its actual implementation.
The data indicates that the committee, mandated by the “Coordination Framework”, held secret meetings with leaders of armed factions to discuss mechanisms for integrating fighters and withdrawing heavy and medium weapons, but some of the meetings witnessed tension and a direct rejection of the idea of handing over weapons.
These moves coincide with the imminent formation of the new government headed by al-Zaidi, who enjoys American support. However, this support appears contingent on a tangible shift in the issue of Iranian influence and the armed factions. Political circles believe that Washington is seeking to prevent figures associated with these factions from joining the next government, while issuing unstated threats of harsher economic and political measures if the delays continue.
In contrast, the armed factions are showing greater rigidity, as they believe that the current American pressure does not exceed what they faced during the previous years of the war, including military targeting and assassination operations.
Sources say that some factions believe that the recent clashes have strengthened their influence rather than weakened it, making them less willing to give up their weapons.
Iraqi sources expect the proposed project to be more of an attempt to “buy time” to pass the new government and appease Washington while waiting for the course of the escalation between Iran and the United States to become clear, while political figures warn that continued stalling could push Iraq towards harsh sanctions and broader political and economic isolation.
Al-Sharmani: Iraq remains a consumer market due to American pressure.
MP Ahmed Al-Sharmani confirmed on Saturday that the Iraqi economy remains burdened by American "guardianship," indicating the existence of external forces working to obstruct any efforts to develop the country's productive sectors.
Al-Sharmani told the Information Agency that "economic dependence on American decisions has prevented the achievement of genuine financial independence," explaining that "vital sectors such as industry and agriculture continue to suffer significant decline due to foreign interventions aimed at keeping Iraq a consumer market."
He added that "there are systematic attempts to hinder the development of economic infrastructure," stressing the need to "liberate the national economy from imposed restrictions and activate local production to reduce reliance on imports and ensure the country's financial sovereignty." Earlier, political analyst Haider Al-Lami warned of American intentions regarding national resources, describing US President Donald Trump's statements regarding the formation of the Iraqi government as an attempt to seize control of the country's wealth.
A political agreement has been reached to pass the al-Zaydi government this week.
A parliamentary source revealed on Saturday that there is a political agreement to pass the government of Prime Minister-designate Ali Faleh al-Zaidi during this week, before a number of MPs head to Saudi Arabia to perform the Hajj pilgrimage.
The source told Shafaq News Agency that the Speaker of Parliament “has not yet received any official notification from the government regarding the submission of the cabinet,” explaining that “if the notification arrives, the date of the session will be set and members of parliament will be notified 24 hours before the confidence vote session.”
He added that "there is an agreement between the parliament's leadership and the heads of the political blocs to pass the government formation during this week, before a group of MPs head to Saudi Arabia next week to perform the Hajj rituals."
Prime Minister-designate Ali Faleh al-Zaidi submitted the ministerial program for the new government to Speaker of Parliament Hebat Hamad al-Halbousi last Thursday (May 7), in preparation for circulating it to members of Parliament for review, with the names of the government formation to be submitted later.
On April 27, 2026, President Nizar Amidi tasked Al-Zaidi with forming the new government after he was nominated by the Coordination Framework to succeed Mohammed Shia Al-Sudani.
Bin Salman congratulates Al-Zaidi: We look forward to working with you to strengthen relations.
Saudi Crown Prince Mohammed bin Salman sent a congratulatory telegram on Saturday (May 9, 2026) to Ali al-Zaidi on the occasion of his appointment as head of the Iraqi government. In his telegram, bin Salman expressed his wishes for al-Zaidi to succeed in serving Iraq and its people, stressing his aspiration to work together to strengthen bilateral relations between Riyadh and Baghdad and enhance cooperation at various levels.
The Saudi Press Agency reported in a statement followed by Network 964 that “His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince and Prime Minister, sent a congratulatory telegram to His Excellency Mr. Ali Faleh Kazem Al-Zaidi on the occasion of his appointment as Prime Minister of the Republic of Iraq.”
She continued, “His Highness the Crown Prince said, ‘On the occasion of your appointment as Prime Minister of the Republic of Iraq, we are pleased to express to Your Excellency our sincere congratulations and best wishes for success and prosperity. We ask God Almighty to grant you success in serving Iraq and its brotherly people. We look forward to working with Your Excellency to strengthen the bonds of brotherly relations between our two countries and peoples, and to enhance them in all fields. We wish Your Excellency continued health and happiness, and the brotherly people of the Republic of Iraq further progress and prosperity.’”
On Saturday (May 2, 2029), Prime Minister-designate Ali al-Zidi received a phone call from Turkish President Recep Tayyip Erdogan, congratulating him on his official appointment to form the new government.
He also received a call from US President Donald Trump on Thursday (April 30, 2026), during which he congratulated him on being officially tasked with forming the new government, and extended an official invitation for him to visit Washington after the government is formed.
On Saturday (May 2, 2026), Al-Zidi received another call from the Emir of Qatar, Tamim bin Hamad Al Thani, congratulating him on his official appointment to form the new government. Al-Zidi also received an invitation from Al Thani to visit Qatar after the formation of the new government.
Mounting financial pressures threaten the 2026 budget.
link
The government faces an early challenge in preparing the 2026 budget, amid declining oil revenues and escalating financial pressures, which puts it in front of limited options between presenting an austerity budget or temporarily continuing spending according to the 1/12 rule. Meanwhile, economic experts and specialists believe that the 2026 budget will face major financial challenges due to declining revenues, which may push it to reduce spending or postpone its approval.
Budget preparation
Nermin Maarouf, a member of the Finance Committee in the previous parliamentary session, confirmed in an interview with Al-Sabah that the government, if formed soon, still has time to submit the draft budget law, noting that its approval in previous years was often delayed until May or June.
She added that the preparation of the budget in Iraq traditionally relies on simple items based on the allocations of the previous year, but she pointed out that there is no legal basis that allows for continued spending according to the (1/12) rule for two consecutive years in the absence of a budget.
compound impact
For his part, crisis management expert Ali Al-Fariji believes that the 2026 budget is no longer just a matter of timing, but a test of the state’s ability to deal with a “compound shock” that includes a decline in oil revenues and export disruptions as a result of regional tensions, in addition to the continued rise in operational spending within an economy that is almost entirely dependent on oil.
Al-Fariji explained in an interview with “Al-Sabah” that preparing a budget in the near term seems unlikely, due to the absence of stable assumptions related to oil prices and export levels, which suggests that the (1/12) rule will continue to be used temporarily until the financial vision becomes clear.
dependence on oil
He added that the main challenges are structural in nature, most notably the dependence of revenues on oil by nearly 90%, the high operating expenses which account for more than 70% of total spending, as well as cash pressures and weak efficiency of investment spending.
Oil revenues
In the same context, economist Jalil Al-Lami confirmed in an interview with Al-Sabah that the option of submitting a full federal budget seems difficult in the short term, suggesting that the (1/12) rule will continue to be used temporarily, especially with the clear decline in oil revenues.
Al-Lami pointed out that Iraq used to rely on oil exports of around 3.5 million barrels per day with monthly revenues ranging between 7 and 9 billion dollars, before they decreased to about 2 billion dollars or less at some times, while the country needs at least 8 to 10 billion dollars per month to cover operating expenses, creating a financial gap that may reach 6 billion dollars per month.
Austerity budget
Al-Lami predicted that if the budget is prepared, it will be an austerity budget, based on an oil price between $60 and $65 per barrel, with a total size between 130 and 150 trillion dinars, and an expected deficit between 20 and 30 trillion dinars, which is subject to increase depending on
Regarding developments in the oil market.
He added that the anticipated budget will not include an expansion in appointments or the launch of new projects, but will focus on completing existing projects and securing basic expenditures, with the possibility of resorting to internal borrowing or drawing from the cash reserve in the event that the crisis continues.
Temporary disbursement
He pointed out that “estimates indicate that the 2026 budget will either be a deferred budget managed through temporary spending, or an austerity budget focused on containing the crisis, at a time when the Iraqi economy is facing a real test to readjust the spending model and avoid slipping.”
Towards a liquidity crisis in the near term.
The parliamentary finance committee expressed its position on borrowing from the central bank to finance domestic expenditures, noting that this issue is linked to the formation of the government.
Borrowing proposal
Committee member Ribwar Karim told the Iraqi News Agency, as reported by Al-Sabah newspaper, that "the proposal to borrow from the Central Bank to finance domestic expenditures is on hold."
On forming the government.
He added that "there is a conviction among the political parties and blocs that there are serious attempts to appoint the next prime minister As soon as possible.
He explained that “if a government is formed, there will be no need to borrow, as a fully empowered government will begin its duties,” noting that “borrowing from the Central Bank is merely an opinion put forward by some members of parliament.”
He stated that “this proposal is primarily linked to the formation of the government, and if that happens, there will be no need for this proposal.”
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Iraq’s Central Bank Moves to Protect the Iraqi Dinar
