Iraqi dinar plunges to lowest value in 2.5 years
The Iraqi dinar traded at 160,000 IQD per $100 on Monday morning, with an economist attributing the fall to several factors, such as the replacement of Iraq's Central Bank governor and lower oil exports due to the effects of the US-Israeli war on Iran.
MILAN, Italy – The Iraqi dinar crashed to its lowest value in over 2.5 years and briefly traded at 160,000 IQD per $100 on Monday due to the effects of the US-Israeli war on Iran and the replacement of Iraq’s central bank governor, according to an economist.
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The Iraqi dinar initially fell during the onset of the Iran war but then stabilized as Prime Minister Ali al-Zaidi’s government was elected. Since then, it has gradually lost value but suddenly crashed on Monday morning to its lowest since November 2023.
Mustafa Hasan, an economic expert who holds a PhD in banking, attributed the crash to several factors, foremost of which was the replacement of Ali al-Alaq as governor of Iraq’s Central Bank by Nizar Nasser.
“Ali al-Alaq was highly favored by the US and was a popular figure. His replacement is the main reason why the dinar lost significant value,” Hasan told The New Region.
Another primary factor for the loss in value has been Baghdad’s inability to sell the same quantities of its oil as before the Iran war, with almost all of Iraq’s oil transiting the Strait of Hormuz. This has forced the government to sell oil at $50 per barrel – a discounted rate.
“Iraq does not have major storage capabilities, so it needs to quickly export the large quantities of oil it produces,” the expert explained. “This has forced the government to sell whatever oil it can at discounted prices to offload its large supply.”
The closure of the Strait of Hormuz dealt a major blow to Iraq’s oil exports, leading to an 80 percent decrease in exports compared to pre-war times. The slash in exports also prompted Baghdad to explore Turkey’s Ceyhan pipeline through the Kurdistan Region, and western routes through Syria.
The rate represents 1,600 dinars to the dollar in the market, compared with the official exchange rate of 1,320 dinars set by the Central Bank of Iraq. The unofficial rate later rose to 1,570 on Monday afternoon.
A weaker dinar raises the cost of imported goods, including food, medicine and consumer products, putting additional pressure on Iraqi households already grappling with rising living costs.
In late April, the US imposed two major economic sanctions on Iraq, halting dollar cash shipments linked to oil revenues and suspending dollar transfers to and from the country.
“The US is not keen on easily providing dollars to Iraq. It has set several conditions for [Prime Minister] Ali al-Zaidi to achieve before it resumes normal dollar flows to Iraq,” Hasan said.
The tighter regulations are set to continue “until mid-July, when Zaidi visits the US and makes several agreements with the Americans,” the expert added.
Zaidi is set to visit Washington in mid-July upon a personal invitation from US President Donald Trump. The visit is aimed at building a “productive economic partnership” and expanding ties with the US, according to Iraqi government spokesperson Haider al-Aboudi.
In October, Iraq’s Central Bank issued a new set of measures to tackle foreign currency smuggling and money laundering, including a requirement that businesspeople submit detailed receipts for purchases made abroad before transferring funds outside Iraq.
Al-Aboudi: The government and the central bank are adopting a flexible approach to the exchange rate.
Government spokesman Haider al-Aboudi spoke about the most prominent features of the work of Ali Faleh al-Zaidi’s government during its first month, stressing that the initial indicators reflect a clear harmony between the practical steps and the announced government program, especially in the files of restricting weapons and combating corruption, in addition to economic reform and diplomatic openness.
Al-Aboudi explained that the Prime Minister's upcoming visit to Washington in mid-July will be his first official foreign trip, aimed at building a productive economic partnership that serves development in Iraq and deepens strategic relations with the United States in a way that enhances trade and investment. He emphasized that this visit will open the door to broader cooperation between the Iraqi and American private sectors, which will positively impact the national economic environment.
Regarding monetary policy, Al-Aboudi emphasized that the government and the Central Bank are adopting a flexible approach to the exchange rate, based on the national interest and achieving a balance between the exchange rate and GDP, thus ensuring the stability of macroeconomic indicators. As for the budget, the Prime Minister affirmed his rejection of the current formula based on allocations and payments, indicating the need to adopt a "program budget" that directs funding towards productive projects that generate tangible returns and support development initiatives.
As for the fight against corruption, he stressed that the government is determined to protect public funds by all means, and that confronting corruption represents a national and moral commitment that cannot be abandoned.
Al-Aboudi also addressed the policy of diplomatic openness, explaining that the government seeks to strengthen its relations with internationally influential countries, thereby achieving greater economic and political integration and bolstering Iraq's standing in the region and the world. He also noted that the relationship with the Kurdistan Region is managed in accordance with the constitution and laws, and that the government is working to resolve outstanding financial and administrative issues in a way that ensures transparency and fairness for all Iraqis.
Al-Aboudi revealed that the completion of the ministerial cabinet will take place in the first half of next July, stressing that the government is monitoring the performance of ministries and the services file on a daily basis, and that its priorities during the next stage are economic reform, combating corruption, developing the electricity sector, in addition to strengthening Iraq’s role in its regional and international environment.
An economic expert warns via Nina against removing zeros... Iraq needs to eliminate the causes of deficit, waste, and corruption.
Former MP and economic expert Hussein al-Falluji warned against rushing the implementation of the project to remove three zeros from the Iraqi dinar and replace the currency, stressing that "this measure will not raise the real value of the dinar, increase the purchasing power of citizens, or address the deep imbalances plaguing the Iraqi economy."
In a statement to the National Iraqi News Agency , al-Falluji said , "Removing zeros is merely a nominal and accounting change to the monetary unit, whereby 1,000 dinars become one new dinar, while prices, salaries, deposits, and debts are changed proportionally, without any real increase in wealth or income." He added,
"The danger lies in presenting this measure to the public as an economic reform or a means to strengthen the dinar, while the strength of a currency is not determined by the numbers printed on it, but rather by the strength of production, the stability of public finances, the volume of exports and foreign reserves, confidence in the banking system, and the ability to control inflation and the deficit." The economic expert pointed out that "replacing the currency under the current circumstances could lead to market instability, exploitation of the currency conversion process to artificially inflate prices, and increased speculation on the dollar and gold, in addition to the significant costs of printing the new currency, withdrawing the old, and upgrading banking and accounting systems and ATMs."
He explained that "Iraq does not suffer from a crisis regarding the form of the dinar or the number of zeros, but rather from a structural economic and financial crisis, characterized by excessive reliance on oil revenues, inflated current expenditures and the public sector wage bill, weak non-oil revenues, poor collection of taxes, fees, and services, declining domestic production, and a weak private sector and banking system." He emphasized that "removing zeros will not change this equation. If the state is spending 100 trillion dinars and collecting limited local revenues, after removing the zeros it will spend an additional 100 billion dinars, while the deficit and financial imbalance will remain the same."
Al-Falluji called on the government and the Central Bank to refrain from seeking "emotional or propagandistic" measures that give the public a temporary impression of currency strength. Instead, he urged them to focus on a serious economic reform program that begins with reforming public finances, controlling spending, developing local revenues, reforming the dinar income cycle, developing the banking sector, stimulating industry and agriculture, and reducing dependence on imports.
He added, "Removing zeros should be a result of actual economic and monetary stability, not a superficial means of creating this stability. Iraq needs to eliminate the causes of deficits, waste, corruption, and weak production before removing zeros from its currency." It is worth noting that government spokesman Haider al-Aboudi confirmed in a statement to the official newspaper that the government and the Central Bank of Iraq are adopting a flexible economic approach regarding the exchange rate policy of the US dollar against the Iraqi dinar, which currently stands at 1,557 dinars. Al- Aboudi explained in a press statement that "this policy is based on achieving the national interest and enhancing economic stability, and can be described as an exchange rate policy consistent with the requirements of economic growth."
He pointed out that this approach seeks to achieve a carefully considered balance between the exchange rate and GDP, reflecting the true strength of the national economy and its structural characteristics, and ensuring the stability of macroeconomic indicators.
He explained that the monetary policy authorized by the Central Bank of Iraq under its law is consistent with the government's general directions, which are based on strengthening economic solutions and activating the tools for sustainable growth.
Central Bank of Iraq: Reintegration of dollar-denominated banks is in its final stages
The Central Bank of Iraq confirmed on Monday that the process of reintegrating banks restricted from dealing in US dollars in foreign transfer operations has reached its final stages, while reiterating its commitment to meeting the demand for dollars in accordance with the approved regulations and standards.
The bank stated in a statement received by (Mawazin News) that it continues to implement its reform program in coordination with the relevant international institutions, with the aim of strengthening monetary and financial stability, developing the banking sector and raising its level of integration into the global financial system.
He explained that "the bank has completed the requirements and procedures for reintegrating a number of dollar-denominated banks into foreign currency transfer operations, after they met the reform conditions and regulatory and technical standards, in addition to strengthening anti-money laundering and counter-terrorism financing measures." He indicated that the process has entered its final stages in preparation for a gradual and organized reintegration. He added that "the bank has also completed the technical and procedural requirements for raising the limits on electronic payment cards for the corporate and business sectors, in a step aimed at expanding digital financial services and enhancing financial inclusion." Regarding the currency market, the Central Bank affirmed its commitment to meeting the demand for US dollars and covering the legitimate needs of the public and private sectors, relying on strong foreign reserves and effective monetary tools, while fully adhering to compliance standards and anti-money laundering and counter-terrorism financing measures. The bank stressed that "these measures are part of a comprehensive reform program aimed at strengthening confidence in the Iraqi banking sector, supporting financial and monetary stability, and contributing to achieving sustainable economic development."
The Central Bank announces the completion of the requirements for reintegrating banks restricted from dealing in US dollars.
The Central Bank of Iraq announced on Monday the completion of procedures and requirements for the reintegration of several banks previously restricted from dealing in US dollars in foreign currency transfers.
In a statement, the bank said, "As part of the Central Bank of Iraq's efforts to enhance monetary and financial stability, develop the banking sector, and increase its integration into the global financial system, it continues to implement its reform program in coordination with relevant international institutions, focusing on several key areas."
The statement added that "the Central Bank of Iraq has completed the procedures and requirements for the reintegration of several banks previously restricted from dealing in US dollars in foreign currency transfers, after they fulfilled the requirements of the reform plan and the relevant regulatory and technical standards, and strengthened their frameworks for combating money laundering and the financing of terrorism." The statement explained that "this process has reached its final stages, paving the way for a gradual and organized reintegration, which will enhance these banks' ability to serve their customers and support the expansion of their correspondent banking relationships abroad in accordance with best practices and international standards."
He added that “the Central Bank has completed the necessary technical and procedural requirements to raise the limits of electronic payment cards for the category of registered companies and businesses, which contributes to expanding the scope of digital financial services, enhancing financial inclusion, and meeting the needs of various segments of customers with payment tools. The bank is proceeding with the implementation of the subsequent phases of this project in a gradual and deliberate manner, in a way that ensures the consolidation of regulatory controls that will enhance the integrity and effectiveness of the system, and keep pace with the rapid developments in the financial sector.”
The Central Bank of Iraq affirmed its commitment to meeting the demand for US dollars in accordance with established regulations and standards, ensuring the smooth flow of transfers and covering the legitimate needs of both the public and private sectors. This commitment is underpinned by strong foreign reserves and effective monetary policy tools, and is implemented with full adherence to compliance requirements and standards for combating money laundering and terrorist financing, as well as a monetary policy focused on exchange rate stability and the integrity of financial channels.
The bank emphasized, according to the statement, that these measures are part of a comprehensive reform program aimed at addressing existing challenges and resolving priority issues. This program seeks to solidify confidence in the Iraqi banking sector, bolster the foundations of financial and monetary stability, and support the country's economic development. The bank
indicated that it will continue to take all necessary measures and implement policies to develop the banking environment, enhance the efficiency of the financial system, and provide the necessary support for sustainable economic growth. This will achieve long-term financial stability and safeguard the stability of the exchange rate and the integrity of financial channels.
Reintegration of dollar-denominated banks has entered its final stages
The Central Bank of Iraq confirmed on Monday that the process of reintegrating banks restricted from dealing in US dollars in foreign transfer operations has reached its final stages, reiterating its commitment to meeting the demand for dollars in accordance with the approved regulations and standards.
The bank stated in a statement that it continues to implement its reform program in coordination with the relevant international institutions, with the aim of strengthening monetary and financial stability, developing the banking sector, and raising its level of integration into the global financial system.
He explained that the bank has completed the requirements and procedures for the reintegration of a number of dollar-denominated banks into foreign currency transfer operations, after they met the reform conditions and regulatory and technical standards, as well as strengthening anti-money laundering and counter-terrorism financing procedures, indicating that the file has entered its final stages in preparation for the gradual and organized reintegration.
The statement added that the bank also completed the technical and procedural requirements for raising the limits of electronic payment cards for the corporate and business category, in a step aimed at expanding digital financial services and promoting financial inclusion.
Regarding the currency market, the Central Bank affirmed its commitment to meeting the demand for US dollars and covering the legitimate needs of the public and private sectors, relying on strong foreign reserves and effective monetary tools, while fully adhering to compliance standards and anti-money laundering and counter-terrorism financing procedures.
The bank stressed that these measures are part of a comprehensive reform program aimed at strengthening confidence in the Iraqi banking sector, supporting financial and monetary stability, and contributing to achieving sustainable economic development, in line with global developments in the financial and banking sector.
Prime Minister's Advisor: Committee formed to prepare the country for the transition to a
performance and program budget
The Prime Minister’s financial advisor, Mazhar Muhammad Salih, announced the formation of a committee to prepare the country for the transition to a performance and program budget, stressing that this approach represents one of the modern methods in managing public spending and evaluating its results.
Saleh explained in a press statement that program budgeting is one of the modern policies in managing public budgets, and it differs from traditional budgets that focus on controlling spending, as it depends on measuring the extent to which spending achieves the set goals and evaluating its actual results.
He explained that this type of budget does not eliminate the traditional line item budget, but rather keeps it as an essential part of the financial system, noting that spending is done within specific programs that include goals, human resources and executive bodies, with a comprehensive evaluation of the results after implementation.
Saleh added that programs such as combating poverty or developing the kindergarten sector require coordination between several government agencies, as well as providing resources and clear time plans, so that their success in achieving the goals can be measured later instead of being satisfied with spending procedures.
He pointed out that the global trend today is based on the principle of efficiency in public spending and linking spending to the benefit achieved, explaining that this is based on calculating the cost of programs against the resulting economic and social benefits.
He pointed out that the committee formed recommended expanding the cost accounting departments in Iraqi universities to train specialized personnel, stressing that implementing program and performance budgeting requires government support, qualified young personnel, and effective use of information technology.
Saleh stressed that the success of the project requires a high-level executive will and central coordination between the Ministries of Finance and Planning and the rest of the state institutions, warning that relying on traditional methods may hinder the achievement of its goals.
He pointed out that the new system will be implemented gradually through what is known as the "shadow budget," as a tool to measure the level of progress, indicating that priority will be given to the investment budget due to the difficulty of applying the system to the large operational budget at the present stage.
The dollar's rise to 1650 will shock the public... An expert warns of the two most difficult months for Iraqi salaries.
International economics consultant Ziad al-Hashemi asserts that mounting financial pressure may eventually push the Iraqi government toward limited options and “painful” measures to increase cash flow in dinars and secure salaries, despite recent official statements denying any intention to raise the exchange rate or remove three zeros.
Al-Hashemi stated that the government is banking on restoring its oil export capacity as a primary solution, but this process will take at least 60 days, presenting it with a genuine financial dilemma requiring swift action to bridge the gap without placing additional burdens on those with limited salaries.
In an interview monitored by Mawazin News, al-Hashemi explained that Iraq’s re-inclusion on the Financial Action Task Force’s (FATF) grey list is a negative indicator that will increase the caution of US correspondent banks and reduce foreign investment, thus placing additional pressure on the parallel market due to increased demand for cash dollars.
He added that “these measures may enable the government to increase cash flow in dinars to the public treasury, giving it greater leeway to secure salaries and other operational expenses on time.”
He continued, “The government, through its current denial, is perhaps betting on Iraq regaining its pre-war oil export capacity and generating additional revenue.” He added, “This matter requires at least sixty days, during which time the government will face a genuine financial dilemma that necessitates swift measures to address this problem.” Regarding the repercussions of officially raising the exchange rate to 1650 dinars, Al-Hashemi pointed out that “the shock will certainly be direct for citizens, especially
those with
limited salaries, as this will immediately impact the prices of goods and services. Thus, the burdens of the financial crisis and rising costs will be directly transferred to the citizens.”
Regarding the feasibility of this decision in addressing the deficit, he pointed out that “even if the government implements this measure and raises the exchange rate to 1,650 dinars per dollar, I believe it will not be able to generate sufficient cash flow to bridge the significant financial gap it faces.” He explained that “the difference of approximately 35 dinars per dollar will not constitute a substantial increase in revenues generated in dinars. Consequently, the government will not benefit as required, while the Iraqi citizen will bear significant and direct harm.” Regarding the price gap, which reached approximately 25 points, Al-Hashemi asserted that “the parallel market will continue to operate at price differences from the official rate, regardless of the Central Bank’s attempts to contain or fully control it. There is a continuous demand for cash dollars outside official channels, often at prices higher than the official rate.”
However, Al-Hashemi made a comparison with previous periods, explaining that “if we compare the current situation with previous years, when there was a currency platform, sanctions, and problems with oversight and regulation, we find that the current differences are much less than those that existed previously.” He continued, stressing that “nevertheless, these gaps will remain due to the nature of the Iraqi monetary and financial system, which allows the dollar to leak into the parallel market. Therefore, the government and the new administration of the Central Bank should focus on addressing this phenomenon during the next stage.”
Regarding the corruption system and the influence of the 15 speculators,
and the reports circulating about 15 influential figures controlling market speculation, Al-Hashemi identified the problem by pointing out that “corruption is deeply rooted in many aspects of the state, and there is an overlap between some political, administrative, commercial, and banking entities, which has led to the emergence of an integrated corruption system affecting various sectors, including the dollar market.”
He emphasized that “addressing the problem cannot be achieved through temporary measures, but rather requires a package of radical reforms aimed at dismantling this system that has been formed over decades, and liberating the Iraqi economy from its influence, thus allowing the Iraqi dinar and economic and commercial activity to operate more freely.”
The risks of returning to the FATF grey list:
Al-Hashemi continued his discussion by analyzing the implications of Iraq's re-inclusion on the Financial Action Task Force (FATF) grey list, considering it "a negative indicator of the reform process in the Iraqi financial and monetary system." He added that "although the current situation is better than it was previously, the FATF sees shortcomings in the areas of transparency, financial investigations, oversight, sanctions, and other essential requirements." He stated that "this is why Iraq was returned to the grey list after having been removed from it in 2018, which necessitates the implementation of specific requirements and procedures within set timeframes in the coming period."
Regarding the immediate and direct repercussions on the banking sector, Al-Hashemi emphasized that the decision "does not mean complete financial isolation, but it will lead to an increased level of scrutiny and caution on the part of correspondent banks, especially American banks, on which Iraqi financial transfers depend."
He warned at the end of his interview that “Iraq’s presence on the grey list may raise concerns among some foreign investors, which may lead to delays or a reduction in the volume of investments coming to the country. In addition, it is likely that the demand for cash dollars in the parallel market will increase, which may cause additional pressure on the exchange rate and raise the value of the dollar against the Iraqi dinar.”
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Iraq faces a new opportunity
The reappointment of US Ambassador Tom Barrack to coordinate his country's policy towards Syria and Iraq – after the end of his term as ambassador in Ankara – confirms expectations of new steps that will have repercussions for Iraq...
Without delving into the details of what is happening in Iraq after the formation of the new government headed by Ali al-Zaidi, it is clear that significant changes are underway at various levels, including political, security, and financial, some of which relate to restructuring the relationship between the central government in Baghdad and the Kurdistan Regional Government in Erbil . These changes have major implications for the future, most of which may be positive, despite the difficulties they face.
New page
The visit of the Prime Minister of the Kurdistan Region, Masrour Barzani, to Baghdad in the last days of May was an important milestone in the context of the transformations taking place. He met with senior Iraqi officials, and the most prominent of these meetings was with the new Prime Minister, Ali al-Zaidi.
According to what was announced by one of the participants in the meeting from the delegation accompanying Barzani, an understanding was reached to open a new page of cooperation between the central government and the region, based on the provisions of the 2005 constitution, especially with regard to considering the security of the region as an integral part of the security of the nation. Financial issues and the oil file were also discussed in depth.
Al-Zaydi pledged to Barzani to prevent all forms of security breaches in the region, particularly the attacks that targeted vital infrastructure during the war between Iran on one side and the United States and Israel on the other. He stated that the missiles and drones that struck the region originated from Iraqi factions loyal to Iran. Al-Zaydi assured the delegation that the state, with the backing of religious authorities, was determined to collect all weapons and restrict their possession to the regular forces under government supervision.
The process of disbanding the Popular Mobilization Forces (PMF) has already begun. Muqtada al-Sadr announced the dissolution of the Peace Brigades, followed by a large number of faction leaders, with the exception of two factions more closely aligned with Iranian policy. However, the Iraqi Prime Minister has affirmed that the disarmament process will encompass all PMF groups, and he is working to overcome the obstacles hindering its implementation.
The justifications for the existence of these factions, which began operating in 2014 to confront ISIS and were legally sanctioned in 2016, have disappeared. The ISIS terrorist organization was defeated by the international coalition established for this purpose. The Najaf religious establishment, which previously provided cover for these factions, has recently called for the state to restrict the possession of weapons to its institutions, now that the ISIS threat has receded.
In the economic, commercial, and oil-related upheaval that swept the region following the outbreak of war and the closure of the Strait of Hormuz, Iraq was significantly impacted. It suffered a severe financial setback, losing approximately $250 million daily. The government was forced to print large quantities of its own currency and sought alternative routes for exporting its products and importing its consumer goods. Faced with this dire situation, Iraq reached agreements with the Kurdistan Regional Government to facilitate the passage of exports and imports through northern land routes. It also imposed restrictions on the transfer of funds to other destinations after the US Federal Reserve imposed a ban on the transfer of hard currency to Baghdad as a result of these factors.
Positive developments
The signs of positive developments in Iraq are very strong. In addition to controlling the security breakdown, the Baghdad government has worked to resolve the existing problems with the new Syrian administration, and oil exports have begun to pass through Syrian territory by tanker to foreign markets. An understanding has also been reached on rehabilitating the oil pipelines that link Kirkuk in Iraq to Banias on the Syrian coast, and the Hilla oil fields to this coast as well.
On the other hand, the reappointment of US Ambassador Tom Barrack to coordinate his country's policy toward Syria and Iraq—following the end of his term as ambassador to Ankara—confirms expectations of new steps that will impact Iraq, particularly regarding the completion of the process of disarming militias. This may be part of the understandings being reached in the region. Barrack previously oversaw the integration of the SDF militias in northern Syria into legitimate institutions. He is currently working to restore US oil investments to Iraq.
Al-Zaydi is accelerating the implementation of the "June Agreement," but can he dismantle the factions' influence before the Washington trip?
He presented himself as a one-term president to escape the accusations.
link
Prime Minister Ali al-Zaidi is expected to arrive in Washington in mid-July, having completed a significant portion of the process of removing figures and leaders linked to factions from sensitive positions within the government.
Informed political sources say these measures constitute one of the pillars of a three-pronged plan agreed upon with the United States. This plan is based on parallel tracks that include on-the-ground measures related to weapons, cutting off funding sources, and removing influential figures from positions of power and influence.
In recent weeks, al-Zaidi's opponents within the Shiite political forces have begun to view his actions as more than just an administrative or security reform campaign; they see it as a project that could lead to what they describe as a "cold coup" against the power structure that emerged after 2003.
This may explain, according to observers, al-Zaidi's early announcement that he will not run in the upcoming elections—a first for a prime minister since 2003—a move interpreted as an attempt to deflect political suspicion from his decisions and present them as part of a national project rather than an electoral campaign.
The "June Agreement": A Short Timeframe Before Washington.
Sources speaking to Al-Mada confirm that the Prime Minister is working within a tight timeframe to finalize what has become known in political circles as the "June Agreement," an understanding that crystallized during the visit of US President Donald Trump's envoy, Tom Barrack, to Baghdad.
Information indicates that the closed-door meeting between Barrack and al-Zaidi, which lasted four hours, later became the starting point for a series of decisions and changes witnessed in state institutions over the past few weeks.
The sources believe that the Prime Minister has limited time to implement the majority of the understandings before his anticipated visit to Washington, where reducing Iranian influence in Iraq tops the US administration's priorities.
Three Fronts Against Iranian Influence.
According to sources close to the government, al-Zaidi has opened three parallel fronts to achieve this goal.
The first involves removing influential figures from positions of power within the state, a front that has made tangible progress recently.
The second involves pursuing corruption cases and economic networks believed to have provided funding to political forces and armed factions in recent years.
The third and most sensitive front remains the issue of weapons and their monopoly by the state, a file that continues to move at a slower pace than the others.
Sources say the government has achieved relative success in removing senior officials whose dismissal is believed to be related to their ties with factions, their proximity to Iranian influence circles, or their failure to curb the expansion of this influence within state institutions.
It appears that al-Zaydi is managing this file according to a policy of "rotation and appeasement" rather than outright exclusion, despite a near-universal conviction within political circles that the forces of the "Coordination Framework" are compelled to adapt to these measures.
In this context, Hussam al-Hassani, spokesperson for the Hikma Movement, dismisses the notion that the recent dismissals and changes are separate from the government's priorities, considering them consistent with the project of monopolizing weapons by the state and economic reforms.
Within a few weeks, the Prime Minister was able to make changes in some of the most sensitive positions in the country, including the National Security Service and the National Security Advisory.
The excluded figures did not disappear entirely from the scene; rather, some were transferred to less influential positions or assigned advisory
roles, thus maintaining political balances and mitigating potential backlash.
Al-Zaidi also succeeded in implementing a significant change within the Central Bank, which is considered a key component of the financial and economic reform plan linked to Iraqi-American understandings.
Political circles believe these measures will have repercussions on complex financial and economic networks, extending their influence to political forces and armed factions.
In this context, Central Bank Governor Ali al-Alaq was transferred to the position of financial advisor to the government, a move seen as a clear example of the "rotation" policy adopted by the Prime Minister in managing changes.
Is the
Popular Mobilization Forces (PMF) next in line? The most sensitive position, however, remains undecided: the chairmanship of the PMF.
Faleh al-Fayyad, one of the longest-serving officials to have retained his post since 2003, may face a scenario similar to that of other officials, especially since the issue of his retirement has resurfaced.
There are indications that he might be transferred to an advisory position, similar to what happened with Qasim al-Araji after leaving the National Security Advisory, or Abu Ali al-Basri after leaving the head of the National Security Service.
The position of head of the Popular Mobilization Forces (PMF) is one of the most problematic in the political system. It previously caused a major crisis between Fayyad and former Prime Minister Haider al-Abadi, which ended with Fayyad siding with Abadi's opponents during the 2018 elections. This stemmed from Fayyad's brief removal from his post, to which he was later reinstated—a move many considered a contributing factor to Abadi's failure to secure a second term.
The scenario was repeated, albeit in a different form, recently when Fayyad distanced himself from former Prime Minister Mohammed Shia al-Sudani after sensing that his position might be targeted for future changes. He later allied with Ahmed al-Asadi, the former Minister of Labor, in an attempt to form a new political bloc, but this has not yet achieved the desired results due to its limited size and the lack of complete agreement with Nouri al-Maliki. The second area where the government appears to have made progress is combating corruption, which it considers
the government's economic weapon . This approach grants al-Zaydi two objectives simultaneously: achieving economic reform on the one hand, and dismantling the networks of vested interests linking certain influential figures to powerful parties and factions on the other. Al-Mada had previously revealed estimates suggesting that approximately $350 billion had been amassed by groups dubbed "corruption kingpins," with a list containing at least 50 names possessing vast sums of money both inside and outside Iraq, including luxury real estate and diverse financial assets. Precise figures regarding the funds recovered by the government are not yet available, despite reports of billions of dinars being reclaimed from individuals connected to the oil, electricity, and port sectors. Former Electricity Minister Luay al-Khatib believes that these developments represent a bold step targeting an issue long avoided by political forces: economic reform.
Government spokesman Haider al-Aboudi affirmed that the Prime Minister views corruption as the most serious threat facing the country and the political system. He indicated that all previous contracts will be subject to auditing and review, and that several projects have been halted despite some having received more than 50 percent of their funding.
Al-Aboudi stressed that the anti-corruption campaign "will not stop and will target all those accused, regardless of their positions or titles."
Weapons: The Most Difficult Issue
. Meanwhile, the issue of weapons remains the most complex aspect of the plan to reduce Iranian influence.
With the exception of the Peace Brigades (Saraya al-Salam), affiliated with the Sadrist Movement, which previously announced the surrender of its weapons and its voluntary integration into the Popular Mobilization Forces (PMF), no other armed group has taken any practical or public steps in this direction.
Although Asa'ib Ahl al-Haq and Kata'ib al-Imam Ali have declared their readiness to participate in the plan, implementation remains limited, while approximately ten other factions continue to reject the project.
The government believes this issue will be nearing its end by next September, coinciding with the withdrawal of international coalition forces, as the justifications for retaining weapons will significantly diminish. However, influential factions, including Kataib Hezbollah, do not share this assessment.
The Cabinet: The Fourth Front.
But there is a fourth issue, no less important than the previous ones, which is the completion of the cabinet.
This issue is directly linked to the future presence of factions and parties close to Iran in government institutions.
The cabinet's completion has been stalled for over a month due to what political circles describe as an "American veto" on figures associated with the factions assuming ministerial portfolios or influential positions. Furthermore, this issue is closely tied to the process of disarming militias and the accompanying internal and external understandings and tensions.
Sources speaking to Al-Mada indicate that a crucial session is likely to be held on July 11 to finalize the cabinet formation and fill the nine vacant ministerial positions. Expectations are that some portfolios—estimated at between three and four—that were originally allocated to factions will be redistributed to other political parties. Compromise formulas, including splitting some ministries, are being considered to address objections and create a new balance of power.
The sources confirm that Prime Minister Ali al-Zaidi is personally managing this process, amidst escalating disputes between the State of Law Coalition and the team of former Prime Minister Mohammed Shia al-Sudani regarding quotas and nominees for the remaining posts.
Why did al-Zaidi announce his withdrawal from the elections?
These issues are further complicated by accusations that the Prime Minister is favoring certain parties over others.
Some of his opponents believe that the campaigns to pursue "corruption kingpins" have focused on figures close to the "Progress" party, led by Mohammed al-Halbousi, an ally of al-Sudani, as was the case with Alaa al-Jubouri and Adnan al-Jumaili.
Those holding this view argue that it might suggest an undeclared alignment with al-Halbousi's opponents, most notably Nouri al-Maliki.
To preempt these accusations, the government spokesperson, in an unusual move, announced that Ali al-Zaidi would not be running in the upcoming elections and would not be establishing a political party.
The announcement came less than 40 days after al-Zaidi assumed power, making him the first prime minister since 2003 to so early decide his stance on the upcoming elections. This was an attempt to convince his opponents that his decisions were not driven by calculations of power resurgence or the pursuit of another term.
The government spokesperson also defended the recent wave of changes affecting sensitive security and administrative institutions, emphasizing that they were not acts of punishment or political exclusion, nor did they reflect any shortcomings on the part of the officials affected. Rather, they were part of a government vision aimed at rebuilding, empowering, and enhancing the efficiency of institutions, in line with the priorities of the new phase.
Al-Zaidi has thus freed himself from the calculations of the elections.
Academic and political researcher Ghalib al-Da'mi believes that al-Zaidi's announcement of his non-participation in the elections carries an important political message.
He told Al-Mada that the prime minister reached his position without a political bloc and without running in the elections, and therefore understands the nature of the political game very well.
He adds that al-Zaydi wants to tell political forces that he has freed himself from the calculations of the upcoming elections, and that he is working on building the state, combating corruption, and controlling weapons, without needing to appease any party in the hope of gaining their support in the future.
Al-Da'mi believes this message was long overdue, because one of the reasons for the failure of previous governments was the prime ministers' pursuit of renewed terms, which led them to engage in constant conflicts and compromises with various political forces.
Washington: Trump supports al-Zaidi and we expect clear steps to restrict weapons to the state.
The US Chargé d'Affaires to Iraq, Joshua Harris, confirmed on Monday that US President Donald Trump supports the government led by Ali al-Zaidi, while we expect clear steps to restrict weapons to the state. He also indicated that US President Donald Trump is looking forward to hosting Prime Minister Ali al-Zaidi in Washington next month.
Harris said in a television interview, according to the official agency, that “American diplomacy is very seriously focused on finding a strong and mutually beneficial relationship between Iraq and the United States, for the Iraqis and the United States,” explaining that “President Trump and Special Presidential Envoy Ambassador Tom Barrack were very clear in wishing the Prime Minister complete success in presenting a government that meets the aspirations of the Iraqis.”
He added, “We welcome the return of the Special Presidential Envoy who returned to Iraq last week. President Trump looks forward to hosting the Prime Minister in Washington next month.” He explained that “there are many opportunities and possibilities in our relationship through economic and trade cooperation to write a new chapter in this regard, and the United States expects that there will be mutual benefit for Iraq and the United States.”
He noted that “there are many important things, a lot of important effort that was made last week, and a joint statement was issued by the Special Presidential Envoy and the Prime Minister, showing our aspiration to confine weapons to the hands of the Iraqi state.”
He explained that “American companies offer the best technology and the best solutions for Iraq, including supporting it in building its future in the field of oil, gas and electricity, in order to take the country to another level and have great results,” noting that “the largest and most capable companies are the American companies that work in Iraq, and are involved in this sector to increase imports of liquefied gas and provide the necessary fuel for power generation plants, and develop existing resources.”
Zidane and the Central Bank Governor discuss strengthening financial stability
The President of the Supreme Judicial Council, Judge Faiq Zaidan, and the Governor of the Central Bank, Nizar Nasser, discussed matters related to strengthening financial stability on Monday. This comes as the new Governor of the Central Bank officially assumed his duties and emphasized the importance of continuing efforts to consolidate financial and monetary stability. In a press statement, the Supreme Judicial Council stated that "the President of the Supreme Judicial Council, Judge Faiq Zaidan, received the new Governor of the Central Bank, Nizar Nasser, and congratulated him on assuming his position, wishing him success in his duties." The statement added that "the President of the Supreme Judicial Council discussed with the Governor of the Central Bank a number of issues of mutual interest related to strengthening financial stability and supporting the legal procedures of the Central Bank."
In addition, a statement from the Central Bank indicated that "the new governor, Nizar Nasser, assumed his official duties, accompanied by the former governor, Ali Mohsen Al-Alaq, and they conducted a field tour that included various offices and departments of the Central Bank of Iraq to review the workflow and understand the nature of the tasks and duties carried out by the departments and directorates."
The new governor of the Central Bank of Iraq, Nizar Nasser, emphasized during his tour "the importance of continuing institutional work and enhancing performance efficiency to contribute to achieving the goals of the Central Bank of Iraq and consolidating financial and monetary stability." Nasser also commended "the efforts exerted during the previous phase under the leadership of the former governor, Ali Mohsen Al-Alaq, and the achievements that contributed to developing the banking sector and strengthening the national economy."
Experts: The rise in the dollar is temporary and the market is on its way to stability.
The parallel market has witnessed a significant rise in the dollar exchange rate in recent days, with the price exceeding 157,000 dinars per 100 dollars, amid anticipation in economic and commercial circles regarding the repercussions of recent regional developments and their impact on the movement of local markets.
This rise comes at a time when economic and financial experts confirm that the factors behind the increase in the dollar's price are not related to official decisions concerning monetary policy or the exchange rate adopted by the state, but rather are due to a combination of speculation, rumors, and regional developments that have led to an increase in demand for foreign currency in the parallel market.
Experts believe that Iraqi markets are directly affected by political and security events in the region, particularly those related to international trade and energy markets. This, in turn, impacts the behavior of traders, importers, and currency speculators. Financial and banking expert Dr. Mustafa Hantoush stated that the current rise in the dollar exchange rate is primarily due to speculation and rumors circulating about a possible adjustment to the official exchange rate in the near future. Hantoush explained that the circulation of such news, despite its lack of basis in official decisions or indicators, has prompted some traders and speculators to increase their dollar purchases in anticipation of future changes. This has led to increased demand in the parallel market and contributed to rising prices.
He added that these practices have negative repercussions on the national economy, as they lead to higher import costs and are directly reflected in the prices of many basic and consumer goods, in addition to creating a state of anxiety and uncertainty in the markets. He pointed out that any decision related to adjusting the exchange rate, whether raising or lowering it, is part of the state's monetary policy and is subject to studies and procedures undertaken by the Central Bank of Iraq. He emphasized that official bodies have not yet announced any intention to change the official rate. He noted that the new governor of the Central Bank may consider various options related to managing monetary policy in the future, but talk of an imminent exchange rate adjustment is not based on official data at present.
Hantoush stressed the importance of curbing speculation that affects market stability, noting that the Central Bank had previously issued reassuring messages to the markets in recent days, and is expected to continue taking measures to maintain exchange rate stability and enhance confidence in the financial sector.
For his part, economist Haider Al-Sheikh explained that an important part of the increased demand for the dollar during the recent period is related to the rapid regional developments, and the concerns they raise in the markets regarding trade and supply chains.
The sheikh said that news related to the Strait of Hormuz and maritime traffic in the region prompted some traders to increase demand for the dollar as a precautionary measure, in addition to the impact of rumors circulating about the possibility of adjusting the official exchange rate.
He stressed that monetary policy in Iraq has not changed so far, and that the official price of the Iraqi dinar remains stable, which makes the current rise in the parallel market have a limited impact compared to the basic economic indicators.
He added that the Iraqi market had previously gone through similar circumstances during which it witnessed temporary increases in exchange rates as a result of psychological factors or political developments, before prices returned to their normal levels after fears subsided and conditions stabilized.
The sheikh predicted that the market would witness gradual stabilization in the coming days as the impact of circulating news subsides and demand levels return to normal. To their normal levels.
For his part, economic researcher Ahmed Eid attributed the rise in the dollar exchange rate to a set of overlapping factors, some of which are related to the internal situation and others to regional and international developments.
He explained that geopolitical tensions in the region and concerns about the security of navigation in the Strait of Hormuz are worrying the markets, given the potential impact on Iraqi oil exports and government revenue flows, which constitute the main source of foreign currency in the country.
He pointed out that these concerns prompted a number of traders and importers to increase their dollar holdings in anticipation of any potential disruptions that might affect trade or financial transfers, which led to increased demand within the parallel market.
He added that the continuation of some procedures and restrictions related to foreign transfers makes part of the demand move towards the informal market, which contributes to increasing the gap between the official price and the parallel market price, especially during periods of tension and uncertainty.
Eid also pointed out that recent developments related to Iraq's inclusion on the Financial Action Task Force (FATF) grey list have raised concerns among some traders regarding transfers and foreign financial transactions, which has indirectly affected market activity.
Parliamentary moves to amend the investment law and activate the private sector
Parliamentary calls have been renewed to amend the investment law, as well as to adopt an effective policy to support the private sector as one of the main solutions to address unemployment and reduce the pressure of absorbing graduates on the government sector.
Member of Parliament Taqi al-Waeli told Al-Sabah newspaper: “There should be laws supporting the private sector, and what was stated in the ministerial program regarding government support for this sector should be translated into concrete measures on the ground.” He explained that most of the current pressure to provide job opportunities falls on the public sector, which cannot absorb the numbers. The large number of graduates.
He added that harnessing these energies requires a clear policy to support the private sector by backing local industries, encouraging investment, and establishing projects capable of absorbing the workforce. He pointed out that the projects exist and the vision is clear, but the problem lies in...
In the weakness of activation and implementation.
Al-Waili explained that investors still face many obstacles when entering the Iraqi market, including administrative red tape and complex procedures, as well as cases of extortion that raise the cost of establishing industrial projects, which leads some investors to prefer importing instead of manufacturing inside Iraq.
He stressed the need to review and amend the investment law to facilitate procedures and remove obstacles for investors, noting that supporting national industry requires financial allocations and well-thought-out policies that ensure real results in terms of job creation.
He pointed out that the success of these steps is linked to the existence of a genuine will to address the issue of unemployment and absorb graduates, indicating that launching service projects alone is not enough unless the necessary financial liquidity and capabilities are available to complete them and turn them into productive job opportunities that contribute to revitalizing the national economy.
Al-Zaydi and Correcting the Course of the State: Combating Corruption as an Entry Point for Institutional Reform
Dr. Haitham Hamid Mutlaq Al-Mansour
It seems that combating corruption in Iraq is no longer merely an administrative or judicial matter, but has become an issue linked to the very future of the state and its ability to survive and function effectively. A state whose institutions are eroded by networks of vested interests and corruption gradually loses its capacity to provide services, manage resources, and formulate public policies, transforming into an administrative structure that consumes more wealth than it produces.
From this perspective, al-Zaydi's early moves can be understood as an attempt to move beyond the traditional approach to corruption as a collection of individual transgressions, and instead view it as a structural flaw that has afflicted the mechanisms of the state.
The swift measures targeting certain figures linked to administrative and financial corruption cases carry political and administrative implications that extend beyond their immediate scope. They reflect an effort to restore the principle of accountability and send a message that positions of influence are no longer immune from oversight and accountability. While the success of these steps depends on complementing them with robust legal and institutional procedures, they represent an important start in breaking the deadlock that has long surrounded major corruption cases.
However, the real challenge lies not so much in changing individuals or holding them accountable and convicting them, but rather in changing the very systems that produced corruption. International experience confirms that corruption is not only a cause of the crisis, but also a consequence of weak institutions, the absence of good governance, and the distorted relationship between power and wealth. Therefore, any serious reform project must move beyond merely addressing the symptoms to tackling the root causes by reforming the administrative, financial, and oversight systems that allow corruption to accumulate and reproduce itself.
On the economic front, it seems that al-Zaydi understands that reform cannot be limited to achieving fiscal balance or addressing the budget deficit; rather, it requires rebuilding the institutional environment within which the Iraqi economy operates. The oil-rentier economy, with its accompanying expansion of government spending, weak productivity, and widespread reliance on the state as a source of income, has created a system of distortions that have made corruption an integral part of the mechanisms for distributing resources and wealth. Hence, combating corruption becomes an entry point for reforming the economy itself by strengthening financial governance, increasing the efficiency of public spending, improving the management of public assets, developing non-oil revenues, and redirecting resources towards investment and development.
The success of this path hinges on the government's ability to shift from a logic of ad hoc campaigns to one of sustainable institutional reform. A state cannot be reformed by short-term decisions, however important they may be, but rather by building new rules of governance and administration that make transparency and accountability integral to the structure of the public system. Only then can combating corruption transform from an end in itself into a tool for correcting the state's course and redirecting it towards efficiency, development, and stability.
Therefore, the real challenge facing al-Zaydi lies not in the number of cases opened or the individuals referred for investigation, but in his ability to transform the fight against corruption into a project for rebuilding the state. His success will then be measured by the tangible improvements he achieves in stronger institutions, more efficient governance, a more productive economy, and a state better equipped to serve its citizens and protect its resources.
The United States issues a general license for the sale of Iranian oil.
The US Treasury Department confirmed on Monday that Iran is committed to freedom of navigation in the Strait of Hormuz, while announcing the issuance of a general license allowing the sale of Iranian crude oil for two months.
"In line with the productive talks taking place in Switzerland, Iran has committed to freedom of passage through the Strait of Hormuz and to allowing IAEA inspectors access to its territory," U.S. Treasury Secretary Scott Bisent said in a statement.
Bisent added that the US Treasury Department had issued a temporary 60-day general license authorizing the production, supply, and sale of Iranian oil.
This comes hours after Iranian Foreign Minister Abbas Araqchi announced that ongoing Pakistani and Qatari mediation efforts had contributed to "significant progress" towards exemptions for oil exports, lifting some restrictions, releasing some frozen assets, and launching a reconstruction plan inside Iran.
On Sunday, direct negotiations began in Switzerland between the American and Iranian delegations, headed by US Vice President J.D. Vance and Iranian Parliament Speaker Mohammad Baqer Qalibaf, with the participation of mediators from Qatar and Pakistan.
According to press reports, the first round of high-level negotiations between the United States and Iran, jointly sponsored by Qatar and Pakistan, concluded at the Swiss resort of Bürgenstock, amid an atmosphere described as positive and constructive, with the announcement of progress and the establishment of a mechanism to continue technical talks.
The two sides agreed to form a high-level committee to oversee the political mediation, along with working groups specializing in the nuclear file, sanctions, monitoring mechanisms and conflict resolution. A roadmap was also adopted with the aim of reaching a final agreement within 60 days.
The understanding included the establishment of a communication channel to avoid incidents and ensure the safety of navigation in the Strait of Hormuz, in addition to a cell to resolve disputes related to Lebanon, while technical talks will continue in the coming days in an effort toreach a final agreement.
Hantoush reveals the priorities of the new Central Bank Governor: Implementing "Oliver Wyman" standards is of utmost importance
this is the new guy not Hantoush
Economic expert Mustafa Hantoush revealed on Monday the priorities of the new Central Bank Governor, Nizar Nasser, stressing that the standards of the Oliver Wyman Foundation are imposing a new banking reality in Iraq.
Hantoush explained to "Al-Eqtisad News" that the appointment of Nizar Nasser to this position represents a fundamental step for Iraqi monetary policy, noting that the next phase will focus on two main sectors: achieving monetary stability and restructuring the banking system.
Hantoush explained that "the Iraqi banking system, especially the private sector, has suffered from severe restrictions in the past that led to the freezing of about $10 billion, which poses a real risk to any market."
He added that the central bank has begun a series of important reforms in cooperation with the Oliver Wyman Foundation, which have reached final meetings with the US Treasury with the aim of freeing the banking system from dollar restrictions, something the market has been waiting for for months.
The economist pointed out that "restoring the banking system to operate on sound foundations represents the beginning of a sound monetary policy, as Oliver Wyman's standards impose a new reality in which banks are not only required to make profits, but are also obliged to attract deposits, provide loans, and finance projects."
Hantoush stressed that "pushing towards an integrated banking system in terms of operations and the market value of shares is a priority, as the continuous increase in capital for banks has become undesirable because it leads to a collapse in the share price on the stock exchange, stressing that these files will be at the forefront of the new governor's concerns."
The Central Bank Governor assumes his duties and reviews the bank's operations.
The newly appointed Governor of the Central Bank of Iraq, Mr. Nizar Nasser, officially assumed his duties, accompanied by his predecessor, Mr. Ali Mohsen Al-Alaq. They conducted a field visit to various offices and departments within the Central Bank to observe operations and understand the nature of the tasks and responsibilities carried out by the different divisions and directorates.
During his tour, Mr. Nasser emphasized the importance of continuing institutional work and enhancing performance efficiency to achieve the Central Bank of Iraq's objectives and consolidate financial and monetary stability. He also commended the efforts made during the previous term under the leadership of his predecessor, Mr. Ali Mohsen Al-Alaq, and the achievements that contributed to developing the banking sector and strengthening the national economy.Baghdad - Media Office,
Central Bank of Iraq,
June 22, 2026
Anti-Money Laundering Expert Reveals the Significance of Appointing a Central Bank Governor Speci..
Because he knows that money laundering and terrorism financing, along with controlling the rhythm of monetary policy in this direction, and preventing money laundering and terrorism financing, have a major impact on monetary policy, as well as on fiscal and economic policy.Here lies the seriousness of the matter. As a legal expert with a master’s degree in law, and having studied abroad in Britain, this indicates the great importance the government — represented by the Prime Minister — attaches to following up on this file.
This file is extremely dangerous. Its danger does not lie only with the Central Bank of Iraq; its danger extends to the entire entity of the Iraqi state.
The entity of the Iraqi state means that, God forbid, if we enter the black list, the entire economy will be directly affected. As you mentioned in your report, even simple money transfers for study or medical treatment will become difficult. The currency’s economy will be affected, trade administration processes will be affected, trade facilities will be affected — all of that.
The presence of such a specialized legal expert is of great importance in drawing up and implementing the financial plan that the Republic of Iraq has committed to before the Financial Action Task Force (FATF).
And this commitment, as I told you, is not just empty rhetoric. It is something that requires time and actual implementation. This time and implementation come with many decisions that the Central Bank must take.
