It heralded the beginning of the era of the "market economy".
Al-Zaydi angrily confronts ministers: Seclusion with foreigners is forbidden, and I will destroy the old economy.
Prime Minister Ali al-Zidi appeared angry at the first cabinet meeting on Saturday (May 16, 2026), issuing directives and instructions to the new ministers. In his first directive, al-Zidi gave the ministers a week to submit the “financial disclosure form,” demanding that the ministers deal with Arab and foreign ambassadors within official contexts, and in the presence of a representative from the Ministry of Foreign Affairs, while taking into account the interests of Iraq.
Al-Zaydi stressed that “real economic reform” begins with changing the way of thinking, not changing faces, pointing out that there are two economies: “an old economy that refuses to die, and a modern economy that refuses to be born.” He emphasized that the next stage will witness the elimination of the old economy and the beginning of a “market economy.”
Al-Zaydi urged the new ministers not to make any functional changes or modifications to the ministry's structure at present, except after a general and comprehensive evaluation of the employees.
In another point that Al-Zaydi emphasized and described as “important,” he demanded that ministers choose their office directors exclusively from among the employees of the ministries, and that the selection be based on “competence” and “integrity,” stressing that he would reject anyone chosen from outside the ministry, indicating that this would be an “unhealthy indicator” for the minister.
Al-Zaydi identified the priorities of each minister in three points: to identify the real problem in the ministry, to stop the bleeding within his ministry, and to present a measurable program within 3 weeks, stressing by saying: “I do not want flowery reports or an explanation of problems that the citizen knows before us.”
The cabinet meeting witnessed the appearance of former cabinet secretary-general Hamid al-Ghazi, who appears to be continuing his duties in the same position.
On Saturday (May 16, 2026), Ali Al-Zaidi chaired a cabinet meeting, during which he listened to the ministers’ interventions about the reality of their ministries, and issued a set of directives to the ministers, which constitute a roadmap for implementing the government’s policies, goals and priorities.
In his first speech after officially assuming his duties on Saturday (May 16, 2026), Al-Zaidi pledged to launch a comprehensive economic and financial reform program based on revitalizing industry, agriculture, tourism and investment, with the aim of building an economy that does not depend on a single resource, stressing that providing job opportunities for young people and reducing unemployment are among his government’s top priorities.
Financial stability is the cornerstone of the government's launch.
In a rapid and remarkable pace, the new government, led by Prime Minister Ali Faleh al-Zaidi, began outlining its executive actions from the first hours of officially assuming his duties. Only a few hours passed before the first cabinet meeting was held, and a set of directives was issued that reflected the orientations of his government program, before one of its most prominent axes was quickly translated through the establishment of the "Financial Stability Council" as a foundational step in the path of economic reform.
On Saturday, Al-Zaidi chaired the first meeting of the "Financial Stability Council," in the presence of the Minister of Finance and the Governor of the Central Bank of Iraq, as part of an initiative aimed at strengthening coordination between fiscal and monetary policies.
During the meeting, Al-Zaydi stressed the importance of achieving financial stability, emphasizing the need to raise the level of coordination between the Central Bank and the Ministry of Finance, and to make consistent decisions that support general stability, which will positively impact the government’s development, service and economic plans.
In the same context, the new government, on its first official working day after gaining the confidence of Parliament, began to outline its executive and political program, with a clear focus on economic reform, combating corruption, improving services, and activating digital transformation.
The Prime Minister stressed, according to a statement from his media office, that the Ministry of Oil should not be limited to selling crude oil, but should transform into an economic institution with added value through developing the oil industry and increasing production and exports.
In the energy sector, Al-Zaydi directed the Ministry of Electricity to prepare two plans, one urgent to address the current summer crisis, and another long-term plan to develop the electrical grid and infrastructure.
He also instructed the Ministry of Foreign Affairs to prepare working papers to reactivate Iraqi relations with the Arab and international communities, in order to strengthen Iraq’s political and diplomatic presence.
In the health sector, he stressed the need to activate the health insurance law, while calling on the Ministry of Transport to proceed with the "Development Road" project to support the national economy and link Iraq to global trade chains.
The directives included obligating ministers to disclose their financial assets within a week, and not to make structural changes within ministries at the present time.
Al-Zaydi also stressed the importance of enabling the House of Representatives to perform its oversight and legislative role, and of strengthening cooperation with parliamentary committees.
In the fight against corruption, the Prime Minister called for giving this file the highest priority, with full cooperation with the Federal Integrity Commission, and working to recover smuggled funds, stressing the need to keep official institutions away from political and factional rivalries.
Al-Zaidi chairs the first meeting of the Financial Stability Board
Prime Minister Ali Faleh al-Zaidi chaired the first meeting of the Financial Stability Council on Saturday and issued a series of directives.
A statement from the Prime Minister's Media Office indicated that "al-Zaidi chaired the first meeting of the Financial Stability Council, which was established under the ministerial program, and which included the Minister of Finance and the Governor of the Central Bank of Iraq."
Al-Zaidi emphasized "the importance of achieving financial stability, given its developmental and economic impacts," noting "the necessity of close coordination between the Central Bank and the Ministry of Finance, and the need to make financial decisions that support stability, which will positively impact government development, service, and economic plans."
Karkoush: Dollar prices and food commodities are the two most urgent issues facing the government.
Imran Karkoush, a member of the State of Law Coalition, confirmed on Saturday that the next government is required to put in place real and quick economic solutions to address the crisis of the rising dollar exchange rate and its direct impact on the prices of food and basic commodities in local markets.
Karkoush told Al-Maalomah News Agency, “The continued fluctuation in the dollar exchange rate directly impacts the livelihoods of citizens, especially the poor and middle classes who bear the greatest burden of rising prices.”
He added that “addressing the crisis requires integrated government measures that include strengthening financial stability, supporting local production, and tightening control over markets to reduce exploitation and unjustified price increases.”
He explained that “the stability of the exchange rate and the improvement of the economic situation would contribute to easing the pressure on the markets and achieving a balance in food prices within the country.”
It is worth noting that addressing the dollar exchange rate crisis is one of the most prominent challenges facing the incoming government, given its direct impact on citizens' living standards and food prices.
An Iraqi observatory presents three options to the Al-Zaidi government to address the financial crisis.
On Saturday, the "Eco Iraq" economic observatory presented three options to the government of Prime Minister Ali Faleh al-Zaidi to confront the financial crisis.
The observatory said in a statement received by Shafaq News Agency that "the Strait of Hormuz crisis has significantly affected Iraq's financial revenues, in addition to a pre-existing financial deficit and an increase in the size of the internal debt."
He added that "there are three main options before the new government headed by Ali al-Zaidi to address the crisis, the first of which is internal borrowing."
The observatory explained that "domestic borrowing is done through the issuance of bonds or treasury bills by the Ministry of Finance, which are purchased by the Central Bank of Iraq, in exchange for providing financial liquidity to the government at specific interest rates."
He pointed out that "the previous government adopted this option during the past years, which contributed to the decline of the official reserve to about 125.6 trillion Iraqi dinars."
The observatory explained that "the second option is to adjust the exchange rate of the Iraqi dinar to 150,000 dinars per 100 dollars, instead of 132,000 dinars, with the aim of increasing government revenues in dinars and reducing the financial deficit."
He explained that "this option was previously used during the government of former Prime Minister Mustafa Al-Kadhimi following the financial crisis and the drop in oil prices, with the possibility of restoring the exchange rate to previous levels if oil and financial revenues improve."
The observatory concluded its statement by saying, “The third option is to resort to external borrowing, as happened during Haider al-Abadi’s government, where some international loans were linked to reform measures and financial and economic conditions related to public spending, employment and fiscal policies.”
A source close to the International Monetary Fund revealed on Thursday that Iraq is seeking financial support from the Fund as a result of the consequences of the war in the Middle East, which has affected the flow of oil and energy supplies from producing countries.
Government advisor: The budget is going through a complex funding crisis and salaries are a "sacred issue"
The Prime Minister's economic and financial advisor, Mazhar Muhammad Salih, stated on Saturday that the general budget is facing a major crisis due to funding disruptions. He attributed this to what he described as the shock of the Strait of Hormuz's closure amid tensions between Iran and the United States, which has affected the smooth flow of approximately 90% of budget revenues.
Salih mentioned that "short-term measures are being implemented," noting the significant coordination and cooperation between fiscal and monetary policies to ensure the government's continued operation and the fulfillment of essential obligations.
He explained that "the ongoing conflict is short-term in nature, and government efforts are currently focused on navigating this phase and mitigating its economic impact."
The advisor emphasized that the issue of salaries is a "sacred matter" affecting the lives of approximately 9 million employees and nearly 40 million citizens, explaining that each salary supports an entire family. He added that in a rentier state like Iraq, any discussion of tampering with salaries is unacceptable, as they are a top government priority.
A potential legal crisis: An expert comments on the government borrowing without an approved budget.
On Saturday (May 16, 2026), economist Nabil Al-Marsoumi sparked controversy regarding the government's legal powers in the matter of borrowing in the absence of a federal budget.
Al-Marsoumi said, in a clarification on the Facebook platform followed by “Baghdad Today”, that “there is no text in the Financial Management Law No. 6 of 2019 that allows the government to borrow in the event that the federal budget law is not enacted, and Article 13 of the law only stipulates that: (In the event that the approval of the federal general budget is delayed until December 31 of the year preceding the year of preparing the budget, the Minister of Finance shall issue a circular according to the disbursement mechanism at a rate of (1/12) (one/twelve) or less of the total actual expenditures for current expenditures for the previous fiscal year, after excluding non-recurring expenditures, on a monthly basis until the federal general budget is approved).”
He added, “Looking back a little, we find that the collapse of oil prices during Al-Kadhimi’s time in 2020, and the inadequacy of public revenues to cover salaries, prompted Al-Kadhimi’s government to resort to Parliament to legislate a law that would allow it to borrow. The first was the Borrowing and Financial Deficit Treatment Law No. 5 of June 2020, in which the Minister of Finance was authorized to borrow locally and externally, not exceeding $5 billion for external borrowing, and 15 trillion dinars for internal borrowing.”
Al-Marsoumi continued, “The second borrowing law and the treatment of the financial deficit was issued on 11/12/2020, to secure the salaries of employees and retirees for the last months of 2020, with a value of 12.5 trillion dinars, after the state treasury reached a stage of being unable to pay salaries.”
He pointed out that “all the internal and external borrowing operations that the Sudanese government resorted to, which exceed 10 trillion dinars this year, lack the legal cover represented by the absence of a general budget in 2026, and the absence of any other law that allows it to borrow, and that any other borrowing operations that the Al-Zidi government will resort to, without the availability of legal cover, are also considered a legal violation and an overstepping of its powers specified in the Iraqi laws.”
ThanksSupport My FX Buddies
BuyMeACoffee CashApp:$tishwash
https://paypal.me/tishwash
.jpeg)
New Iraqi Government Faces Mounting Fiscal Pressure as Eco Iraq Outlines Crisis Solutions
Eco Iraq says the closure of the Strait of Hormuz and declining oil revenues have intensified Iraq’s financial crisis
Iraq’s worsening financial crisis has prompted renewed debate over emergency economic measures after Eco Iraq presented three proposals aimed at helping the country confront mounting fiscal pressure triggered by the regional war and the closure of the Strait of Hormuz.
In a press statement published on Saturday, the observatory said the crisis in the Strait of Hormuz had significantly affected Iraq’s financial revenues, while the country was already facing a pre-existing budget deficit and rising domestic debt.
Eco Iraq stated that the new government led by Prime Minister Ali al-Zaidi now faces three primary options to address the crisis, beginning with domestic borrowing.
According to the observatory, internal borrowing would be carried out through the Ministry of Finance issuing treasury bonds or treasury transfers purchased by the Central Bank of Iraq in exchange for providing liquidity to the government with specified interest rates.
The statement noted that previous Iraqi governments relied heavily on this mechanism in recent years, contributing to a decline in Iraq’s official reserves to approximately 125.6 trillion Iraqi dinars.
Eco Iraq said the second option involves adjusting the Iraqi dinar exchange rate to 150,000 dinars per 100 US dollars instead of 132,000 dinars, with the aim of increasing government revenues in local currency and reducing the fiscal deficit.
The observatory explained that a similar measure had previously been implemented during the government of former Prime Minister Mustafa al-Kadhimi following the financial crisis and falling oil prices, adding that the exchange rate could later be restored if oil and financial revenues improve.
The third option proposed by the observatory is external borrowing, similar to the approach adopted during the government of former Prime Minister Haider al-Abadi.
Eco Iraq noted that some previous international loans had been linked to reform measures and financial and economic conditions related to public spending, employment, and fiscal policy.
IMF and World Bank discussions
The proposals come as Iraq holds preliminary discussions with the International Monetary Fund and the World Bank regarding possible financial assistance following severe losses in oil revenues caused by the Iran war and the closure of the Strait of Hormuz.
According to a Reuters report published on Friday, Iraqi officials approached the IMF during the institution’s spring meetings with the World Bank in Washington last month to discuss possible funding mechanisms.
A source close to the IMF and an Iraqi government official said to Reuters, discussions remain ongoing regarding the amount of financing Iraq may require and how any future loan would be structured.
An Iraqi official advising on financial policy said the talks are expected to be finalized once the new government in Baghdad formally assumes power.
The war, which began on February 28, 2026, with a large-scale US-Israeli military campaign against Iran, triggered Tehran’s closure of the Strait of Hormuz and caused major disruption across the Middle East.
Iraq was among the countries hardest hit by the crisis, as the closure of the waterway halted most Iraqi oil exports, which account for nearly all government revenues. Before the conflict, the Strait of Hormuz carried nearly one-fifth of the world’s crude oil supplies.
IMF spokeswoman Julie Kozack said the Fund was working alongside the World Bank and the International Energy Agency to assess the impact of the war on member states.
Kozack also stated that the IMF remained engaged in active discussions with several countries seeking policy advice, noting that IMF Managing Director Kristalina Georgieva had indicated that at least 12 countries could seek between $20 billion and $50 billion in assistance.
She did not specify which countries had formally requested support.
The World Bank said it generally does not comment on shareholder discussions before board approval.
Iraq possesses the world’s fifth-largest petroleum reserves, and its economy remains heavily dependent on oil exports.
According to IMF data, Iraq’s most recent financial agreement with the Fund was a $3.8 billion standby arrangement that expired in July 2019, of which $1.49 billion was drawn. Iraq currently owes the IMF approximately $2.39 billion, including around $891 million provided through a rapid financing instrument.
The financial debate now unfolds as Iraq’s new government attempts to navigate one of the country’s most difficult economic periods in years, amid shrinking revenues, regional instability, and growing pressure to secure liquidity while maintaining economic stability.
The Iraqi dinar is under pressure from the financial crisis and fears of declining monetary cover.
Warnings are increasing about the repercussions of the financial crisis on the stability of the Iraqi dinar, with growing talk about the possibility of using part of the cash reserve to cover government expenses.
Economic expert Dr. Safwan Qusay confirmed the possibility of resorting to the cash reserves of the Central Bank of Iraq, given the existence of an amount exceeding $90 billion, while warning at the same time of the occurrence of inflation within Iraq.
Qusay said that “the Central Bank of Iraq’s reserves amount to $90 billion in addition to 170 tons of gold, and if borrowing from these reserves is relied upon, it is possible to continue with financial flexibility up to $60 billion.”
He added that “the $60 billion represents the value of the issued Iraqi dinar, but the dinar’s value falling below the aforementioned financial cover means allowing inflation to occur domestically.”
He explained that “the possibility of resorting to borrowing from the central bank’s reserves, or the occurrence of the aforementioned inflation, may happen six months after this May, as the government can secure salaries for this period of time.”
David Petraeus arrives in Iraq and meets with the Iraqi Chief Justice
The President of the Supreme Judicial Council, Judge Faiq Zaidan, received retired US General David Petraeus on Saturday.
The meeting discussed a number of issues of common interest, while the head of the Supreme Judicial Council expressed his appreciation for the efforts made by Petraeus during his time in Iraq in the field of combating terrorism and supporting paths to stability, in addition to encouraging national reconciliation efforts at the time.
Petraeus in Baghdad: American messages and political moves with the new government
Political analyst Mohammed Talib Karim linked the visit of retired US General David Petraeus to Baghdad and his meeting with high-level officials and political figures to the continuation of US pressure on Iraq.
Karim told Al-Maalomah that Petraeus’s visit was “unusual and carries a hidden agenda that the United States seeks to implement in Iraq in conjunction with the formation of a new government,” noting that “the retired American general is one of the architects of the Iraqi phase after 2003,” and that he “was leading the security files, in addition to having previously taken over the management of the American intelligence agency.”
Karim added that “any appearance of Petraeus in Baghdad is a political and security event,” especially since “his meetings included the head of the Supreme Judicial Council and the Speaker of Parliament,” a move through which Washington seeks to “reorganize its relations with Iraqi state institutions.”
Karim suggested that “the United States will move towards repositioning itself within Iraq in the coming period after the decline of its influence” and its failure to achieve a “clear victory” over Iran and the resistance factions in the Middle East, specifically “losing the bet on the Strait of Hormuz and the inability to overcome this obstacle.”
He added that "American assessments in the Middle East are heading towards redrawing new balances, at a time when Iraq is being viewed as a central knot due to its geographical location, which is an important economic corridor linking the Gulf with Syria and Europe."
Karim believed that "Petraeus's visit carries a double message to the Iraqi interior," the first being that Washington is present and monitoring Iraqi details, and the second being "an attempt to produce a new Iraqi formula (with an American recipe) whose ingredients are set by Washington."
Petraeus arrived in Iraq in the past few hours, coinciding with the new government assuming its duties. In Baghdad, he met separately with the head of the Supreme Judicial Council, Faiq Zaidan, and the Speaker of Parliament, Haibat al-Halbousi.
Al-Zaydi listens to security reports from the Popular Mobilization Forces, the army, and the Ministry of Interior, and directs them to raise their readiness levels.
On Saturday evening, Prime Minister and Commander-in-Chief of the Armed Forces Ali Faleh al-Zaidi received, separately, the head of the Popular Mobilization Forces, Faleh al-Fayyad, the Chief of Staff of the Army, Abdul Amir Rashid Yarallah, and the senior undersecretary of the Ministry of Interior, Hussein Hasab al-Awadi.
His media office stated in a statement received by Shafaq News Agency that Al-Zaidi listened during the meetings to a detailed explanation of the general security situation in the country, without announcing additional details about the content of the reports presented.
According to the statement, the Commander-in-Chief of the Armed Forces directed the continuation of efforts to enhance security stability, intensify coordination between security agencies in various areas of responsibility, raise the level of readiness, and provide the requirements of officers and ranks in the Armed Forces and other security agencies, in order to ensure the implementation of tasks and duties.
President Al-Zaidi: Economic reform, fighting corruption, and providing job opportunities are at the top of the government's priorities.
Prime Minister Ali Faleh al-Zaidi confirmed on Saturday that the next phase will witness the launch of a comprehensive economic and financial reform program, while stressing the need to protect public funds, fight corruption, and improve basic services in the country.
In a televised address to the Iraqi people on the occasion of his official assumption of duties as Prime Minister, Al-Zaydi said that he extends his sincere thanks and appreciation to the House of Representatives for granting him confidence, and he commended the role of the leaders of the Coordination Framework and the national political forces in the success of the government formation process.
He added that the next phase will be “a phase of genuine national partnership that transcends differences,” pledging to work to confront challenges with a spirit of responsibility and cooperation.
Al-Zaydi explained that his government will prioritize the implementation of an economic and financial reform program aimed at building a strong, diversified and sustainable national economy, based on revitalizing the industry, agriculture, tourism and investment sectors, in addition to supporting national energies and Iraqi competencies.
He indicated that the government will work “with all its might” to protect public funds and combat administrative and financial corruption in all its forms, considering it an obstacle to development and the progress of the state.
Regarding employment, the Prime Minister stressed that providing job opportunities for young people and reducing unemployment rates will be at the forefront of the government’s concerns, through launching productive and developmental projects, encouraging investment, and supporting the private sector.
He also stressed the importance of achieving social justice and ensuring the fair distribution of opportunities among citizens, away from favoritism and discrimination, in order to strengthen the principle of citizenship.
In the education and health sectors, Al-Zaydi announced plans to support education exceptionally by developing curricula and upgrading schools and universities, as well as improving medical and health services, developing hospitals and health centers, and providing treatment and medicine to all citizens.
He stressed that the services and infrastructure file will be “a field of work and achievement,” through the implementation of strategic projects to improve electricity, water, roads, sewage, transportation and housing.
He pointed out that his government would be “a government of institutions, law and justice,” working to consolidate security and stability, protect Iraq’s sovereignty and strengthen Arab, regional and international relations on the basis of mutual respect and common interests.
Al-Zaydi also expressed his gratitude to the supreme religious authority, praising its role in maintaining social peace, in addition to his appreciation for all religious and national institutions and symbols from the various components of the Iraqi people.
The Prime Minister concluded his speech by emphasizing that “the path of reform may be difficult, but it is not impossible when intentions are united and efforts are sincere,” stressing that Iraq deserves to rise up and achieve a dignified life for its people.
Zaidi formally assumes office, pledges economic reform and fight against corruption
Ali al-Zaidi officially assumed his duties Saturday as Iraq’s prime minister and commander-in-chief of the armed forces during a handover ceremony at the Government Palace in Baghdad attended by former Prime Minister Mohammed Shia al-Sudani.
In his first address to Iraqis after taking office, Zaidi outlined priorities including economic reform, anti-corruption measures and improvements to public services.
“I extend my sincere thanks and appreciation to the Council of Representatives for the national vote of confidence,” he said, also thanking Coordination Framework leaders and political parties involved in forming the government.
Zaidi said his administration would pursue “a comprehensive economic and financial reform program aimed at building a strong, diversified, and sustainable national economy that does not rely on a single resource,” focusing on industry, agriculture, tourism and investment. He pledged to combat corruption, describing it as “an obstacle to development and delays the progress of the state,” and said creating jobs for young people through development projects and private sector support would be among the government’s top priorities.
On services, Zaidi said “the file of services and infrastructure will no longer remain hostage to deferred promises,” committing his government to projects covering electricity, water, roads, sewage, transportation and housing. He also promised reforms in education and healthcare, including developing school curricula and improving hospitals across urban and rural areas.
Parliament approved 13 ministers Thursday during a session attended by 266 lawmakers. Several nominees failed to secure confidence, including those for planning, higher education, interior and construction and housing. Voting on defense, labor, migration and youth and sports ministries, along with deputy prime minister positions, was postponed.
Abu Dhabi attracts huge investments and a new alliance invests $30 billion
BlackRock’s GIP unit announced on Thursday a strategic partnership with Singapore’s Temasek Holdings, Abu Dhabi’s newest sovereign wealth fund L’IMAD, and the UAE’s ADNOC. The alliance aims to invest $30 billion in infrastructure projects across the Gulf region and Central Asia through a mix of equity and debt financing, targeting both new and existing assets in vital sectors including energy, transportation, and logistics.
This move aims to bolster the position of the Gulf Cooperation Council (GCC) countries, particularly the UAE, as preferred destinations for long-term global capital, despite the geopolitical challenges associated with the ongoing conflict with Iran. This partnership reflects strong economic fundamentals and a mature investment environment, with Abu Dhabi recently announcing a new $15 billion infrastructure package designed to attract private sector funding, demonstrating significant investment momentum in the region.
This announcement brings together BlackRock, which acquired GIB in 2024 in a deal valued at $12.5 billion, and sovereign wealth funds with substantial financial resources. A key player in this alliance is L'IMAD, which, since its inception last December, has become a global investment powerhouse with assets estimated at around $300 billion.
In this context, Jassim Bu Ataba Al Zaabi, Managing Director of the Fund, stated that infrastructure represents a key pillar of their investment strategy, especially in markets that are experiencing demand driven by sustainable structural trends.
