After a "difficult labor", the 2025 budget tables finally find their way to the Council of Ministers
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A responsible source in the Iraqi Ministry of Finance stated on Monday that the delay in sending the federal budget tables to the Council of Ministers is related to amendments to Article 12 of the Budget Law.
The video for this blogpost is below here:
The Iraqi parliament recently approved an amendment to the general budget related to Article 12, which settles a dispute between the Kurdistan Region and the federal government over receiving the region’s oil.
In summary, the Iraqi Parliament voted in June 2023 on the draft general budget law for the fiscal years (2023, 2024, 2025), to approve special budget tables for those years, which will be sent by the Iraqi government to Parliament for voting.
The government source told Shafaq News Agency, "The Ministry of Finance has been working for some time on preparing the general budget tables for the year 2025, in order to send them to the Council of Ministers for approval."
He pointed out that "the Ministry of Finance will finish preparing the tables and send them to the Council of Ministers for voting on them in the middle of next month," noting that "the Council of Ministers will vote on the tables without delay and then send them to the House of Representatives for voting on them."
The Federal Ministry of Oil announced yesterday, Sunday, the completion of the necessary procedures to complete the export of oil produced in the Kurdistan Region via the Turkish port of Ceyhan, stressing that this step comes in accordance with the mechanisms specified in the budget law and its amendment, and within the production ceiling set for Iraq in the OPEC organization.
The Kurdistan Regional Government's negotiating delegation responded to the Ministry of Oil's announcement by calling on the federal government to implement its obligations before proceeding with the oil export process.
The delegation explained that despite the regional government’s confirmation of its commitment to implementing the first amendment law to the federal general budget law, which relates to re-exporting oil produced from the region’s fields to the Turkish port of Ceyhan via SOMO, implementing the law requires agreement on several basic points, including determining the quantities allocated for local consumption in the region, in line with actual needs, similar to the rest of Iraq, and establishing a clear and specific mechanism for paying the dues of production and transportation companies to the regional government, in accordance with what is stated in the law.
Waiting for Türkiye's answer within 24 hours.. Oil: We will receive 185 thousand barrels per day from Kurdistan
The Iraqi Ministry of Oil said on Sunday, February 23, 2025, that it will receive 185,000 barrels per day from the Kurdistan Region.
The Undersecretary of the Ministry of Oil for Extraction Affairs, Basem Mohammed Khudair, said in a statement followed by "Al-Jabal", "The suspension of export operations from the Kurdistan Region during the past period caused a problem for the oil fields in the region, and it requires a period of rehabilitation to restore their production capacity, with the aim of reaching the export of 400 thousand barrels per day, which is the minimum quantities stipulated in the budget."
He added, "The quantity currently available for export in the region is 300,000 barrels per day, part of which is allocated for internal use, while the remaining 185,000 barrels will be allocated for export."
He pointed out that "the past period witnessed a visit by a delegation from the Ministry of Oil to the region, and it was agreed to form joint committees to follow up on the mechanisms for resuming oil exports," and "we were informed by the region of its readiness to begin the export process."
He explained that "the technical teams of the North Oil Company and representatives of the Kurdistan Region are working to inspect the oil export pipelines and ensure their suitability and readiness to resume pumping oil through them."
Khader confirmed that "the Ministry of Oil has contacted the Turkish side to inquire about the readiness of the pipeline designated for export via the port of Ceyhan, and we are awaiting an answer within the next 24 hours."
He said, "The ministry is keen on the sustainability of export operations through the port of Ceyhan as part of a strategic vision for the relationship between Iraq and Turkey, and there is continuous communication with the region and the Turkish side to ensure the continuation of cooperation and export."
Today, the negotiating delegation of the Kurdistan Regional Government announced reaching an agreement with the Federal Ministry of Oil regarding the resumption of oil exports from the Kurdistan Region via the Turkish port of Ceyhan abroad, indicating that the export will be carried out according to the available quantities.
A statement issued by the negotiating delegation stated that, "After communication and coordination between the federal Ministry of Oil and the Ministry of Natural Resources of the Kurdistan Region, an agreement was reached and confirmed to resume the export of the region's oil according to the available quantities," adding that "a joint technical team was formed today to inspect the export pipeline and determine its readiness," stressing "the commitment to implementing the provisions of the Federal General Budget Law."
Yesterday, Saturday, the Iraqi Ministry of Oil announced the completion of procedures to resume the export of Kurdistan Region oil through the port of Ceyhan, in accordance with the mechanisms set out in the budget law and its amendment, and within the production ceiling set for Iraq in OPEC.
The Ministry of Oil requested "the regional authorities to hand over the quantities produced from the operating fields to the Oil Marketing Company, to begin exporting through the Iraqi-Turkish pipeline and the port of Ceyhan, in accordance with the contracts signed with the nominated companies."
Reuters revealed US pressure on Iraq to resume Kurdistan Region oil exports or "face sanctions. " Reuters quoted eight informed sources as saying that "the administration of US President Donald Trump is increasing pressure on Iraq to allow the resumption of Kurdish oil exports or face sanctions alongside Iran . "
Oil Minister: Oil exports from Kurdistan Region will resume within a week
Oil Minister Hayan Abdul Ghani said on Monday that oil exports from the Kurdistan region will resume within a week.
This came in response to a question about when Iraq will resume oil exports from the region, stressing that this issue will be settled within a week, adding that Iraq is waiting for Turkey's approval to resume pumping oil and we hope that Kurdish oil exports will be ready within two days.
In response to another question about whether the resumption of Kurdistan oil exports will affect Baghdad's commitment to OPEC decisions, the minister said, "His country is committed to the bloc's decisions and the exported quantities are under the control of the ministry," according to Reuters.
The Kurdistan Regional Government said in a statement yesterday, Sunday, that the region's authorities agreed with the federal Ministry of Oil to resume crude exports from it based on available quantities.
Economist comments on Iraq’s commitment to OPEC restrictions: It will lose $10 per barrel
Economic expert Nabil Al-Marsoumi commented on Iraq’s decision to abide by the OPEC oil export agreement restrictions, with the resumption of oil exports from the Kurdistan Region, stating that “Iraq will lose $10 for every barrel exported from the region instead of Basra.”
Al-Marsoumi said in a blog post published on his social media account, today, Sunday, that "if Iraq will actually adhere to the restrictions of (OPEC+), this means that Basra crude exports will decrease by the amount of Kurdistan's exports," adding that "Iraq will lose $10 for every barrel of crude oil exported from Kurdistan instead of Basra."
Earlier today, the Iraqi Ministry of Oil confirmed its commitment to the OPEC+ agreement on the specified quantities of oil for export, noting that the oil that will resume export from the Kurdistan Region will be within the quota allocated to Iraq in this agreement, as well as taking measures to ensure the implementation of this agreement.
A statement issued by the Ministry of Oil in this regard, which was viewed by Al-Jebel Platform, stated that "the Iraqi Ministry of Oil confirms its full commitment to the OPEC+ agreement, the additional agreed-upon cuts, and the compensation of accumulated quantities. The Ministry will take the necessary measures to ensure the implementation of these agreements, including submitting an updated plan to compensate for the surplus production during the previous period."
He pointed out that "according to data issued by secondary sources approved by OPEC, Iraq's crude oil production in January 2025 amounted to 3.999 million barrels per day," noting that "this is a positive indicator that reflects Iraq's commitment to the specified production levels."
The statement stressed that "the Iraqi Ministry of Oil will continue its efforts to compensate for the accumulated surplus, taking into account the recent developments expected to receive the federal government's oil produced in the Kurdistan Region and resume exports through the Iraqi-Turkish pipeline, while adhering to Iraq's share stipulated in OPEC agreements for voluntary reduction and the required compensation quantities." The ministry also stressed "the pivotal role of these agreements in achieving stability in global oil markets, and the importance of the contribution of the member states of the OPEC+ alliance in supporting this stability."
Reuters reported on Monday that the Iraqi Oil Minister said that oil exports from Kurdistan via the port of Ceyhan will resume next week.
President Barzani, Iraqi-American delegation discusses business and cultural ties
The Kurdish President, Nechirvan Barzani, welcomed a delegation from the Iraqi diaspora in the United States to discuss strengthening economic ties and cultural cooperation.
According to a statement by the Kurdish presidency, during the meeting, President Barzani praised the Iraqi diaspora’s role in fostering connections between Iraq, the Kurdistan Region, and the international community, highlighting their contributions to economic development, reaffirming the Region’s commitment to “peaceful coexistence and pluralism among all communities.” He further assured that the Region will continue to act as a model of “peace, pluralism, and openness.”
The visiting delegation, led by Martin Manna, Head of the Chaldean-American Chamber of Commerce, advocated for deeper collaboration with the Kurdistan Region, particularly in economic and investment initiatives involving members of the Iraqi diaspora. Additionally, they presented proposals for business and investment projects in the Nineveh Plain and the Kurdistan Region.
Expert: US dollar will rise against Iraqi dinar
Economic expert Mohammed Al-Hasani considered, on Monday, the decline in the dollar exchange rate against the Iraqi dinar during the past days to be temporary, stressing that the gap is still large.
Al-Hasani told Shafaq News Agency, "What we are witnessing of a gradual decline in the dollar price against the dinar is temporary and will soon return to its previous status," describing the decline as "not significant."
He added that "traders who deal in dollars are trying to exploit and profit from false and baseless information by promoting certain rumours."
Al-Hasani pointed out that "the gap between the Central Bank's price and the dollar prices in the local markets, or what is known as the parallel market, is still large, at more than 17 to 18 thousand dinars."
The dollar exchange rate in the Iraqi local markets fell during the past week from 150,700 dinars to 149,300 dinars.
Prime Minister's Advisor: The government has developed an economic approach to enhance growth and reduce unemployment
The Prime Minister's financial advisor, Mazhar Muhammad Salih, confirmed today, Monday, that the government has developed an economic approach to enhance growth and reduce unemployment, while noting that the new industrial cities will be the cornerstone of the economic renaissance.
Saleh said, in a statement to the Iraqi News Agency (INA): "The Sudanese government has developed a clear economic approach to enhance the national economy, which is represented in raising growth rates in the non-oil gross domestic product by no less than 5%, in addition to gradually reducing unemployment rates to stabilize at 4% in the future."
He explained that "achieving these two goals requires focusing on economic development priorities, most notably supporting the manufacturing industry, which can absorb 60% of unemployment, and contribute to diversifying sources of national income and increasing the gross domestic product rapidly."
He pointed out that "the government is working to achieve this through three main tracks, including supporting youth lending initiatives, which included many youth groups to stimulate the workforce, and establishing "Riyada Bank" as a private bank with broad government support to grant loans to small and medium-sized industrial activity, in addition to forming a sovereign guarantees committee to finance large industries through bank loans guaranteed by the state, in cooperation with major industrial countries such as Western Europe and Japan."
Saleh stressed that "these efforts will focus on developing five main industrial fields, including infrastructure industries related to the "development path" and reconstruction projects, pharmaceutical industries, in addition to petrochemical industries and petroleum derivatives, and advanced engineering industries, in addition to developing the oil sector and manufacturing natural and associated gas, with the aim of zeroing its burning and benefiting from it in the electricity sector."
He added that "the new industrial cities on the development path will be the cornerstone of the comprehensive industrial development strategy in Iraq," noting that "the industrial renaissance is based on a strategic vision based on a partnership between the state and the private sector, within the philosophy of (building the social market)."
Sudani's Financial Advisor: Iraq is economically stable and in its best condition
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economically and in its best condition, and the general budget
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is supported by cash liquidity assets based
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on oil and non-oil revenue plans
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He pointed out that there is support from the
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banking apparatus in the budget when necessary, thanks to the strength
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of available foreign reserves and the cooperation
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strong between monetary and fiscal policies
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He added that there is no crisis hindering the
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receiving of employees' salaries and pensions in the coming months
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Possible Collapses.. US Sanctions “Imminent and Inevitable”: Trump Imposing a New Reality on Iraq
Iraq is expected to enter a new phase of US economic pressure, as part of Washington’s policy to undermine Iranian influence in the region. Abbas Aqeel, a researcher in Iraqi affairs, and Mustafa al-Taie, a specialist in strategic affairs, confirmed in separate statements to Baghdad Today that US sanctions on Iraq are now a matter of time, based on political and economic data that reflect the approach of the current US administration.
The political file and the importance of balance
Researcher Abbas Aqeel said, “The US economic sanctions on Baghdad are coming, there is no doubt about that. It is only a matter of time,” but he ruled out that the main goal is to change the political class in the country or to overthrow the Coordination Framework, noting that “the Trump administration does not necessarily seek to change the ruling powers as much as it aims to reduce Iranian influence within Iraq.”
Aqeel added that "the US administration's positions towards Iraq are not the result of pressure from lobbies within Washington, but rather reflect a growing conviction in the White House that Iraq has become part of Iranian influence," explaining that this perception is not limited to the US point of view, but is also expressed by Iraqis.
The United States of America recently imposed new sanctions on a number of Iraqi banks, which raised widespread concern in Iraqi economic and political circles about its expansion as it comes within the framework of American efforts to combat the financing of terrorism and ensure compliance with international laws related to combating money laundering and financing of illegal activities.
These sanctions could restrict Iraq’s access to global financial markets, complicating import and export operations and affecting economic stability. Sanctions could also undermine citizens’ and investors’ confidence in local banks, leading to a decline in deposits and increased pressure on liquidity. In addition, international money transfers could face greater difficulties, especially with restrictions on dealing with Iraqi banks by international financial institutions.
Economic dimensions and trade obstacles
For his part, Mustafa Al-Taie, a strategic affairs expert, explained that “America is well aware that Iraq is Iran’s economic lung, and for this reason it will seek to impose various sanctions that directly target Baghdad, in an attempt to limit Iranian financial support.”
Al-Taie added that "the statements of the second deputy speaker of parliament, Shakhwan Abdullah, regarding the American sanctions did not come out of nowhere, but rather reflect messages he received during his recent visit to the United States, which indicates the existence of a clear American plan in this regard."
He pointed out that "the economic repercussions of these sanctions will be dangerous for Iraq, as the Iraqi government relies on the US dollar in its financial transactions, and any US restrictions on financial transfers will negatively affect the Iraqi economy, which may lead to an increase in the prices of goods and a deterioration in the purchasing power of citizens."
Last Saturday, Deputy Speaker of the House of Representatives Shakhwan Abdullah confirmed that "it is likely that the US administration will issue new political and economic decisions regarding Iraq and the United States, which have been discussed several times with the federal government."
According to observers and specialists, trade between Iraq and Iran constitutes an important aspect of the economic relations between the two countries, as they are linked by long borders and deep historical, cultural and economic relations. This trade is divided into two main sections: apparent (official) trade and hidden (unofficial or parallel) trade, each of which has its own characteristics and effects.
In terms of apparent trade, Iran is one of Iraq’s largest trading partners, with trade volume between the two countries amounting to billions of dollars annually. Iranian exports to Iraq include a wide range of goods, such as food, industrial products, electricity, and construction materials. Several bilateral agreements have also been signed between the two countries to facilitate trade and enhance economic cooperation, including agreements in the fields of energy, transportation, and investment.
The hidden or informal trade constitutes a large part of the economic exchange between Iraq and Iran, and it takes place across the land border away from official control. This trade includes the smuggling of goods such as fuel, tobacco, electronics, luxury goods, in addition to medicines and agricultural products, in addition to the smuggling of currency and oil, which are the operations targeted by sanctions.
The hidden trade negatively affects the Iraqi economy, as it weakens local industries due to the influx of Iranian goods at low prices, and contributes to the spread of corruption and security instability in the border areas. In addition, this trade raises international concerns, especially from the United States, due to the possibility of its use to finance illicit activities or entities designated as terrorists.
In return, Iran benefits greatly from trade with Iraq, both official and covert, as the Iraqi market is an important outlet for Iranian goods under international sanctions. This trade also contributes to strengthening Iranian political and economic influence in Iraq.
Security dimensions and potential impacts
Abbas Aqil believes that “the recent events in the region, especially what followed the Al-Aqsa flood, showed the features of the next stage,” noting that “the political system in Iraq, which was established after 2003, will not collapse, but the ruling class, especially the Coordination Framework, is exposed to a real danger because of its acceptance of Iraq being part of Iranian influence, and its encouragement of armed factions, which may put it in direct confrontation with American sanctions.”
Diplomatic file and Iraq's international position
Data indicates that Iraq faces a difficult diplomatic challenge, as US sanctions may affect its relations with Western powers, which may push it towards further rapprochement with Russia and China to compensate for potential economic losses.
Al-Taie believes that “the United States has not completely closed the door on Iraq, but it is demanding a more independent position from Tehran,” adding that “the sanctions may include reducing security cooperation between Baghdad and Washington, which may affect counter-terrorism efforts, especially in light of the continued threats of ISIS in some Iraqi areas.”
A necessary step for the benefit of Iraq
In light of these challenges, observers believe that Iraq needs to reevaluate its foreign policy to avoid escalation with the United States, by adopting a more balanced approach in its regional relations, and reducing its dependence on Iran economically and politically.
Al-Taie asserts that “Iraq can avoid the worst-case scenario by adopting economic reforms that reduce its dependence on the US dollar in financial transactions, in addition to strengthening its relations with Arab and Gulf countries to confront the economic consequences of sanctions.”
New spiral or opportunity?
Iraq appears to be entering a complex phase, with increasing US pressure to reduce Iranian influence, which could put the Iraqi government in a difficult position between Washington’s demands and Tehran’s pressure. In light of these challenges, Iraq must take serious steps to protect its economy and political stability, to avoid entering a new cycle of crises.
New US sanctions target 22 individuals, 13 vessels linked to Iran's oil industry
The US State Department announced, on Monday (February 24, 2025), the imposition of sanctions on 22 individuals and 13 ships related to the Iranian oil industry.
According to the ministry's statement, which was reviewed by Baghdad Today, a network linked to these individuals and ships was accused of concealing its role in transporting Iranian oil and selling it to buyers in Asia.
She stressed that these sanctions are an initial step to activate US President Donald Trump's approach to the policy of maximum pressure on the Iranian regime, which aims to disrupt illicit financial flows that support activities that Washington considers malicious by Iran, including its nuclear program and its support for armed groups in the region.
The move comes as part of a broader US strategy aimed at curbing Iranian oil exports, which are Iran's main source of revenue, after the US withdrew from the Iranian nuclear deal in May 2018.
Through these sanctions, Washington seeks to increase pressure on Tehran to force it to change its negotiating behavior regarding its nuclear program and regional activities, according to observers.
Economist: Kurdistan steals 300 billion dinars monthly from smuggling oil to Türkiye
Economic expert Rashid Al-Saadi confirmed today, Monday, that the Kurdistan Regional Government is stealing more than 300 billion dinars per month from smuggled oil exports to Türkiye.
Al-Saadi said in a statement to Al-Maalouma Agency, “The regional government did not abide by the decisions of the Federal Court and the International Court of Arbitration regarding the delivery of the revenues of oil exported to Turkey, which are estimated at about 300 billion dinars per month as a result of exporting 400 thousand barrels per day.”
He added, "The export operations became illegal after the State Oil Marketing Company (SOMO) stopped supervising them."
Al-Saadi explained that “oil smuggling operations from the region to Türkiye have reached 400,000 barrels per day, smuggled via tanker trucks without the knowledge of the central Iraqi government.”
He pointed out that smuggling operations have witnessed a significant increase recently due to weak oversight by the central government, which has contributed to the spread of this phenomenon.
Recommendation to the government to adopt the strategy for the “shadow economy”
The Ministerial Council for Economy recommended, on Monday, that the Council of Ministers adopt the strategy for the informal economy in Iraq presented by the Anti-Money Laundering and Terrorist Financing Council, which includes the concept and structure of the shadow economy, the reasons for its existence and its economic effects, in addition to proposals to address it and integrate it into the formal economy.
The media office of the council stated in a statement:
Deputy Prime Minister, Minister of Foreign Affairs, Chairman of the Ministerial Council for the Economy, Dr. Fuad Hussein, chairs the sixth session of the year 2025 of the Ministerial Council for the Economy.
Deputy Prime Minister and Minister of Foreign Affairs Dr. Fuad Hussein chaired the sixth session of the Ministerial Council for the Economy on Monday, February 24, 2025, which was held in the Council building in the presence of the Deputy Prime Minister and Minister of Planning, the Ministers of Finance, Trade, Agriculture, Industry, Labor and Social Affairs, the Secretary-General of the Council of Ministers, the Governor of the Central Bank, the Chairman of the Securities Commission, the Deputy Chairman of the National Investment Commission, and the Prime Minister’s Advisors for Economic and Legal Affairs.
The Council hosted the Project Officer at the Grand Faw Port and the Director of the Submerged Tunnel Project to discuss the progress of engineering work in the project, as well as providing facilities for importing some engineering materials that increase the properties of reinforced concrete used in concrete block structures and exempting them from import permits. The Council decided to take the opinion of the Ministry of Environment regarding some chemical materials used in civil engineering works and the extent of their impact on the environment.
The Council also hosted the Director General of Information Technology and Payments at the Central Bank of Iraq to evaluate the experience of using electronic payment mechanisms in transactions in the public and private sectors. The Council stressed the need to continue this important experience and expand it to include all financial transactions and payments for all economic activities in light of the Cabinet’s decision in this regard.
The Council also reviewed the strategy for the informal economy in Iraq (the shadow economy) presented by the Anti-Money Laundering and Terrorist Financing Council.
The study included several axes that addressed the concept, structure, and characteristics of the shadow economy, the reasons for its existence, its indicators, and its economic effects, as well as proposals to address the shadow economy and integrate it into the formal economy and the challenges that accompany those proposals. The Council decided to recommend to the Council of Ministers to adopt that strategy due to its importance.
The Minister of Agriculture gave a brief explanation of the environmental and health situation of livestock in Iraq and also reviewed the epidemiological situation of foot-and-mouth disease in the areas affected by the disease. The Minister indicated that the epidemic was largely confined to the areas of Al-Fadhiliyah and Al-Nahrawan and that the agricultural health teams are continuing with the detection, examination and treatment operations, while providing the necessary vaccines and treatments to control this disease, stressing that there are no human infections due to the use of meat or animal products.
The Council supported the Ministry of Agriculture's measures in this regard, reassuring the Iraqi public that this disease is not transmitted to humans.
JPMorgan’s reclassification of Kuwait signals strong economic prospects
Reuters
JPMorgan removes Kuwait from emerging market index
KUWAIT CITY: Kuwait is set to make a significant transition in the global financial landscape, with JPMorgan announcing its reclassification from an emerging market to a developed market. This change is part of a broader shift that also affects Qatar, with both nations scheduled to be gradually removed from JPMorgan’s Emerging Markets Bond Index (EMBI). The removal process, which begins on March 31, is expected to unfold over a six-month period. Although the reclassification primarily impacts government bonds, the move is anticipated to open new avenues for foreign investment, further stabilizing and growing Kuwait’s financial environment.
JPMorgan’s EMBI is a key reference for investors tracking emerging market bonds, which typically carry higher risk but offer potentially higher returns. As a result of the reclassification, Kuwait’s bonds will no longer be included in the EMBI, a shift that will impact capital flows for investors involved in emerging market debt. As of January 31, Kuwait accounted for 0.6% of the EMBI Global Diversified Index, and the nation’s exit from the index will contribute to a narrowing of bond trading opportunities in emerging markets.
For Kuwait, the reclassification is seen as a step forward, reflecting its growing economic stability. Although the change will likely reduce the investor base within emerging markets, experts suggest that Kuwait will continue to attract investment from those looking beyond the EMBI’s scope. Anders Faergemann, co-head of global fixed income in emerging markets at Pinebridge Investments, stated that, even without being part of the benchmark, Kuwait’s economy remains a promising destination for investment due to its fiscal prudence and solid credit profile.
Kuwait’s reclassification aligns with a broader trend of economic and legislative reforms designed to bolster foreign investment. The country’s Finance Minister, Noura Al-Fassam, recently stated that Kuwait’s debt law is now in its final stages. The passage of this law is expected to enable Kuwait to issue debt for the first time since 2017, potentially raising up to $65 billion over the next 50 years. This move, which is part of a larger effort to diversify Kuwait’s revenue base away from oil dependence, signals a long-term commitment to improving the country’s financial infrastructure.
The reclassification is also expected to draw more foreign investors into the local market, particularly in the Kuwait Stock Exchange (KSE). The KSE has been preparing for this shift by introducing new investment tools such as corporate bonds, sukuk, and index funds, all of which are likely to attract greater capital flows. Additionally, a new central counterparty (CCP) system is being developed to further enhance market liquidity and facilitate investment, particularly from foreign institutions. These reforms are poised to strengthen investor confidence in Kuwait’s economic prospects and boost long-term market stability.
Despite the positive outlook, Kuwait faces fiscal challenges. The government has projected a budget deficit of 6.31 billion dinars ($20.4 billion) for the fiscal year 2025-2026, a significant increase from the current year’s estimated deficit of 5.6 billion dinars ($18.2 billion). This rise is partly due to lower-than-expected oil revenues, underscoring Kuwait’s ongoing vulnerability to fluctuations in global oil prices.
However, analysts remain optimistic that Kuwait will successfully manage its fiscal challenges, especially as the government continues to invest in infrastructure projects and diversify its economy. The country’s planned debt issuance under the new law will provide additional resources for capital expenditure, which is vital for ongoing development efforts.
The reclassification of Kuwait, along with Qatar, from emerging to developed market status, will likely influence broader financial trends. The removal of both nations from the EMBI is expected to reduce the amount of capital flowing into emerging markets, which may increase the yield investors demand to hold emerging market bonds compared to U.S. Treasuries. This yield spread is expected to widen by approximately 11 basis points as a result of the reclassification.
Kuwait’s departure from the EMBI reflects its increased financial stability, but it also suggests a shift in the global investment landscape. With Kuwait’s bond market now outside the EMBI framework, it is expected to continue drawing attention from investors seeking low-risk opportunities in developed markets, especially as global demand for stable and diverse investment opportunities grows.
The transition to developed market status marks a critical juncture in Kuwait’s economic evolution. As the country navigates its fiscal challenges and undertakes new legislative measures, the reclassification is poised to enhance its global financial standing. With increased foreign investment, greater market liquidity, and a commitment to economic diversification, Kuwait is positioning itself for long-term growth.
As foreign institutions and global funds increasingly look to invest in Kuwait, the country’s financial markets will continue to expand. The reclassification not only reflects Kuwait’s evolving creditworthiness but also underscores the nation’s growing importance as an attractive investment hub in the Middle East.
While Kuwait's removal from the EMBI will affect emerging market bond traders, the reclassification has clear long-term benefits. As Kuwait moves toward a more diversified and stable economic future, the investment community will likely examine the opportunities emerging within its borders more closely. The next few years will be critical for Kuwait as it continues to strengthen its financial framework and attract international investment.
Iraq's ministers attend IBBC's largest Baghdad conference 2025
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