48 hours until the government committee's report is issued... Baghdad and Erbil await a decision
The Kurdistan Region's employee salary crisis continues, despite the recent rapprochement between Baghdad and Erbil and a series of meetings between the federal and regional governments.
The video for this My FX Buddies is below here:
Meanwhile, the Council of Ministers has directed the formation of a committee comprising five ministers to resolve the outstanding issues between Erbil and Baghdad and find appropriate solutions.
The Council of Ministers formed a committee headed by Minister of Planning Mohammed Tamim, with four members: Minister of Health Saleh al-Hasnawi, Minister of Justice Khaled Shawani, Minister of Construction and Housing Bangin Rikani, and Minister of Education Naeem al-Aboudi, to study the proposals submitted to the Council of Ministers and reach a final agreement on the outstanding issues between Baghdad and Erbil. The
relationship between the governments of Baghdad and Erbil is witnessing a complex clash of disputes. While the two sides are trading accusations regarding the financial crisis, more than 60 days have passed since the last salary received by an employee in the region, after the suspension of money transfers by a decision by Finance Minister Taif Sami.
Points of Disagreement
An informed government source revealed that the committee formed by the Council of Ministers has been given 48 hours to submit its final report to the Council of Ministers regarding resolving the outstanding issues between Baghdad and Erbil.
The source explained to Al-Mada that "there is a breakthrough in the crisis between Baghdad and Erbil, and several points of disagreement remain, but an agreement can be reached on them before next week."
He added, "The first point is the region's share of local consumption, which the region says is around 65,000, while Baghdad says it is around 46,000. There is a possibility that 55,000 could be an average figure to resolve the issue between the two parties."
The other point is the method of disbursing salaries; the federal government insists on domiciling them in the federal banks, Rafidain and Rashid, while the regional government says that domiciling should be done through an accounting project, and no agreement has been reached on this point yet.
Deputy Prime Minister of the Kurdistan Region, Qubad Talabani, revealed developments in the ongoing talks between Erbil and Baghdad, stressing that the federal government's demands aim to "eliminate" and abolish the Kurdistan Region. He considered that the region's acceptance of these demands would be a "violation of the constitution." In a press interview, he said, "Our goal is to reach an agreement. There is no alternative to an agreement, no disagreement, but the process is complex and the fighting is difficult."
Markets in the Kurdistan Region are suffering from a major recession, which has impacted people's lives, led to a major depression and increased rates of poverty and unemployment.
Unbearable Demands
Furthermore, Sherzad Hussein, a member of the Kurdistan Democratic Party, says that the federal government's demands are unbearable, and that there are parties in Baghdad that do not want a solution.
Speaking to Al-Mada, he pointed out that "every time the region responds to a request from Baghdad, they impose other conditions and demands. It is clear that several political parties are exploiting the issue of salaries for electoral propaganda."
He pointed out that "the region has fulfilled all financial obligations, and regarding the delivery of oil, there are debts owed to oil companies, and Baghdad is unwilling to pay them. If the region delivers all the oil, how will it pay the dues it owes?"
Some cities in the Kurdistan Region, including Qaladze, Bashdar, and Raniya, witnessed night demonstrations demanding the payment of salaries, while a number of employees in Sulaymaniyah continue to strike due to the delay in salary payments.
The Federal Ministry of Finance transferred April salaries on May 13. Since then, May salaries have not been funded or disbursed, despite the advent of Eid al-Adha and the increasing financial pressures on citizens.
Commitment to the Agreement
On the other hand, Finance Committee member Soran Omar believes that there is no alternative to the agreement between Baghdad and Erbil, as it is the solution to the salary problem.
He confirmed in an interview with Al-Mada that "the regional government says it cannot secure the payment of salaries, and therefore it must adhere to the draft prepared by the federal Council of Ministers, because there is no alternative to this agreement, and any delay will harm the Kurdish citizen, who will pay the price.
" He stated that "if the report of the committee formed by the Council of Ministers is issued and the regional government adheres to it, Baghdad will transfer the delayed salaries successively, but the matter depends on Erbil's compliance."
Kurdish politician and leader in the Democratic Party, Hoshyar Zebari, accused the federal government and Prime Minister Mohammed Shia al-Sudani of evading the payment of the dues of Kurdistan Region employees by involving the region in technical and procedural details.
On the other hand, political affairs researcher Aram Rashid believes that negotiations between Baghdad and Erbil have reached their final stages, and any retreat from either party will complicate the issue and will not be in Iraq's interest as a whole.
Speaking to Al-Mada, he explained that “it is in Iraq’s interest to see stability in the Kurdistan Region. Maintaining the current financial situation and delaying salary payments means that Kurdistan will go through a difficult period, marked by demonstrations, protests, and political exploitation of the crisis. This is not in Baghdad’s interest, especially with the election date approaching.”
He continued, “Withdrawal may be a real option for the Kurdistan Democratic Party if an agreement is not reached, because the party will be embarrassed in front of the citizens, as it cannot provide their salaries.”
International warning to Iraq.. An expert discusses the IMF report: You are to blame, too.
Economic expert Suham Yousef discusses the latest report by the International Monetary Fund (IMF), which included significant warnings to the Iraqi government regarding the continued decline in revenues while increasing public spending, which constitutes a serious structural deficit in the economy's structure.
The expert's criticism of the IMF itself stems from the fact that the IMF itself is unaware of the Iraqi political and social context, which makes implementing the "ready-made recipes" it offers extremely difficult. Its proposals clash with the spread of the deep state's influence and its obstruction of tax reform aimed at increasing non-oil revenues, for example. The proposal to rationalize spending also clashes with the fragile social reality and the dependence of millions of Iraqis on government salaries amid a weak private sector and the expansion of the "parallel economy." This situation places Iraq facing an imbalance with every barrel of oil sold, the continued depletion of financial reserves, the rise of public debt to 62%, and the decline of foreign investment to 0% of GDP.
In its latest report, the International Monetary Fund (IMF) issued a stark warning about worsening financial and economic vulnerabilities, warning that the country is heading toward a widening budget deficit amid declining oil prices, weak non-oil revenues, and ballooning current expenditures, particularly for wages and pensions. The report presents an accurate but worrying picture of the Iraqi economy and raises fundamental questions about the government's preparedness to contain the coming crisis.
According to estimates, the budget deficit will jump from 4.2% of GDP in 2024 to 9.2% in 2026, due to declining oil revenues and the lack of real diversification of income sources. While oil revenues have declined from approximately $99 billion to $79 billion in just three years, public expenditures show no resilience and continue to rise, reflecting the state's continued unsustainable financial management.
Despite the government's attempts to present plans to diversify the economy, the reality tells a different story. Non-oil growth slowed sharply to just 1% in 2024, according to IMF estimates, compared to 13.8% the previous year. This decline reveals that non-oil sectors remain limited in their impact and suffer from weak infrastructure, a lack of real incentives, and an unattractive investment environment.
The report highlights the rise in the fiscal breakeven price of oil to $84 per barrel, compared to $54 four years ago. With global prices currently at just $70, the Iraqi budget suffers from an internal imbalance with every barrel sold. Continuing this trend will lead to a rapid depletion of financial reserves and a sustained rise in public debt levels, expected to reach more than 62% of GDP by 2026.
Meanwhile, foreign direct investment is almost completely disappearing, remaining at 0% of GDP until 2026, indicating a lack of international confidence in the Iraqi economy. This reflects a structural flaw in the business environment, a lack of transparency and governance, a confused legal system, and the absence of a clear strategy to attract quality investments.
The criticism that can be leveled at the IMF itself is that it provides an accurate description of the problem, but does not take into account the nature of the Iraqi political and social context, which makes implementing "ready-made" reform prescriptions extremely difficult. Increasing non-oil revenues, for example, requires comprehensive tax reform, which the state does not appear capable of achieving given the weakness of the deep state and the proliferation of the parallel economy.
The Fund's recommendations regarding rationalizing spending, particularly on wages, also clash with a fragile social reality, as millions of citizens depend on government salaries as their primary source of income, given the weakness of the private sector and the lack of effective social safety nets.
Ultimately, Iraq's fiscal deficit and economic stagnation cannot be addressed without bold reform decisions, beginning with restructuring expenditures, freeing the economy from the grip of the rentier state, activating partnerships with the private sector, ensuring the independence of economic institutions, and building a truly productive base.
Iraq faces the threat of a worsening fiscal deficit in the medium term due to declining oil revenues due to lower prices and increasing financing constraints. Meanwhile, the estimated crude oil price needed to balance the budget has risen by more than 55%, according to the International Monetary Fund.
Although the IMF commended Iraq's ability to maintain internal stability despite regional turmoil and global uncertainty, it expects financing constraints and declining oil revenues to hamper fiscal spending, further weighing on economic activity. The significant fiscal expansion in recent years has increased vulnerabilities in the country, exacerbated by the recent decline in oil prices, according to the report issued by the IMF's Executive Board on Wednesday following the conclusion of the Article IV consultation.
Iraq's public finances are expected to witness a significant decline, with the budget deficit estimated at 4.2% of GDP in 2024, widening to 7.5% in 2025, and then 9.2% in 2026. This comes amid a decline in oil revenues from 36% of GDP in 2024 to 31% in 2026, compared to an increase in public spending from 43.5% to 43.8% during the same period, particularly in wages and pensions, which will reach 24.5% of GDP in 2026, according to the IMF.
The Iraqi government seeks to diversify the economy and reduce its dependence on oil, which accounts for more than 90% of state revenues. Steps have been taken to strengthen non-oil sectors such as agriculture, industry, and tourism, along with measures to improve the business environment and provide guarantees to the private sector, with the goal of attracting local and foreign investment to develop these sectors.
Despite this, oil remains the country's primary source of revenue and exports, with average crude oil production estimated at 3.9 million barrels per day in 2024 and expected to rise to 4.1 million barrels in the following two years. Oil exports reached 3.4 million barrels per day in 2024 and are expected to rise to 3.5 million in 2025 and 2026.
Oil revenues declined from $99.2 billion in 2024 and are expected to fall by $84.2 billion in 2025 and then to $79.2 billion in 2026, affected by lower prices, which fell from an average of $80.6 per barrel last year to $65.9 per barrel this year and $62 per barrel next year.
The Washington-based international institution raised Iraq's oil price requirement to $84 per barrel in 2024 from $54 in 2020, citing increased spending and weak non-oil revenues.
The price of Brent crude has fallen to around $70 per barrel, from above $80 at the beginning of this year. Oil prices are under pressure due to tensions over US tariffs and concerns about a market surplus.
Bloomberg Intelligence forecasts a surplus of more than 1 million barrels per day in the oil market in the second half of the year. Unless the OPEC+ alliance slows the pace of production increases or demand unexpectedly improves, oil prices could remain under sustained downward pressure until the end of the year.
To avoid financial hurdles, Baghdad needs to implement fundamental reforms to increase non-oil revenues, control the public sector wage bill, and enhance non-oil growth potential by developing an ambitious structural reform agenda.
Iraq's non-oil sector growth is projected to decline to 2.5% in 2024 from 13.8% in 2023, according to IMF estimates. The slowdown is expected to deepen to just 1% growth this year before improving slightly to 1.5% next year, reflecting the fragility of the non-energy economy. This contrasts sharply with the government's forecast of 4% non-oil economic growth this year, according to the Iraqi Ministry of Finance in May.
Iraq's non-oil primary budget deficit is expected to continue to reach 59.3% of non-oil GDP in 2024, gradually declining to 51.8% by 2026. The IMF also projects that government debt will jump to 62.3% of GDP in 2026, after remaining stable at 47.2% in 2024 and 2025.
The Fund also noted the high sovereign debt risks, which it believes require urgent policy intervention. It also indicated that the authorities must stabilize debt levels over the medium term.
Economic Indicators:
Iraq's real GDP is expected to contract by 2.3% in 2024, before returning to growth of 3.1% in 2025 and 1.4% in 2026.
Iraq's inflation rate is expected to stabilize at relatively low levels, estimated at 2.7% by the end of 2024, with a slight increase to 2.9% in 2025 and 2026.
On the current account front, the surplus is expected to decline from 2.0% of GDP in 2024 to 0.2% in 2025, reaching a deficit of 1.9% in 2026. Foreign reserves will also shrink from $100.3 billion to $79.2 billion over the same period, equivalent to a decrease from 11.1 to 9.6 months of imports.
The Iraqi dinar exchange rate is expected to stabilize at 1,300 dinars to the US dollar over the next three years, remaining largely unchanged. Foreign direct investment, however, remains virtually nonexistent, at 0 percent of GDP through 2026.
Iraq's population is estimated at 44.4 million in 2024, with a per capita GDP of $6,183 per year. Recent data shows that the poverty rate remains at 23%, compared to 2014, indicating the need for further structural and developmental reforms.
Money supply (M2) growth is projected to decline by 4.3% in 2024, with a relative recovery to 9.6% in 2025 and 4.9% in 2026. In contrast, credit to the private sector is expected to grow by 14.3% this year, before slowing to 5.4% and then rising again to 8.4%
IMF Executive Board Concludes 2025 Article IV Consultation with Iraq
link to IMF site to see actual report
Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation[1] with Iraq and considered and endorsed the staff appraisal without a meeting on a lapse-of-time basis[2].
- Iraq has managed to uphold domestic stability despite regional turmoil and global uncertainty. At the same time, the non-oil economy slowed down in 2024 following a very strong growth in 2023. Inflation has remained subdued amid weaker demand. Financing constraints and lower oil revenues are expected to constrain fiscal spending, taking an additional toll on economic activity.
- Against a baseline of low oil prices, fiscal deficits and external accounts are projected to deteriorate further over the medium term unless significant reforms are undertaken to increase non-oil revenues, control the public wage bill, and boost non-oil growth potential through an ambitious structural reform agenda.
Executive Board Assessment
Iraq’s economy is facing considerable headwinds. Iraq's non-oil sector growth slowed from 13.8 percent in 2023 to an estimated 2.5 percent in 2024, impacted by reduced public investment, a weaker trade balance, and financing constraints that led to the accumulation of arrears. Going forward, financing constraints, subdued investment and constrained growth potential are expected to weigh on growth and intensify preexisting fragilities.
The large fiscal expansion in recent years has increased Iraq’s vulnerabilities, which are further exacerbated by the recent decline in oil prices. As spending expanded and non-oil revenues stagnated, the oil price required to balance the budget increased to around $84 in 2024, up from $54 in 2020. The financing constraints that emerged in 2024 are expected to worsen this year in light of the oil price drop. Furthermore, risks of sovereign debt stress have risen, calling for urgent policy action.
A sizable fiscal adjustment is needed to mitigate macro-fiscal risks, contain liquidity risks and stabilize debt in the medium term. In the very short term, the authorities should review current and capital spending plans for 2025 and limit or postpone all non-essential expenditure.
There is also scope to boost non-oil revenues through increases in excises and custom duties. Over the medium term, stabilizing debt would require an additional fiscal consolidation of 1–1.5 percent of non-oil GDP per year.
On the revenue side, besides strengthening tax administration, there is scope to increase customs duties and excise taxes, reform personal income tax including by limiting exemptions, and introducing a general sales tax in the medium term. On the spending side, comprehensive public wage bill reforms through limiting mandatory hiring and adopting an attrition rule would yield significant savings. Recent efforts to better target the public distribution system are welcome, but there is scope to further improve targeting and eventually shift to cash-based social safety nets. Finally, it is urgent to reform the public pension system by raising the retirement age and reducing both the accrual and replacement rates.
Implementing the proposed reforms could generate fiscal space for increased non-oil capital spending. Crucial non-oil capital expenditures should be protected given the need to expand investment in trade and transportation infrastructure to promote economic diversification; and modernize the electricity sector and develop natural gas resources, which are crucial for enhancing energy security and decreasing reliance on gas imports. Additionally, improving procurement, public financial management, and addressing corruption would boost the effectiveness of any new public investments.
Further efforts are needed to absorb the remaining excess liquidity and improve monetary policy transmission. This could be achieved by increasing the issuance of CB-bills, focusing on short-term instruments piloted by the policy rate, adjusting bid size limits, and refining liquidity forecasting tools.
Efforts to strengthen the domestic financial system should continue and accelerate. The CBI should be commended for the successful transition to the new trade finance system now fully managed by commercial banks through their CBRs, contributing to a reduction in the spread between the official and parallel market exchange rates.
While initial reforms of state-owned banks are promising, a comprehensive restructuring plan addressing nonperforming loans and capital shortfalls is necessary, along with improvements in corporate governance and digital infrastructure. Furthermore, the CBI has started to explore reform options to strengthen the private banking sector. Priority areas are the ownership structure, business model sustainability, regulatory requirements, and elements to support mutual confidence between banks and their customers, such as a credit bureau and stronger deposit guarantee scheme. Alongside these efforts, addressing weaknesses in anti-money laundering and counter-terrorism financing remains paramount.
A comprehensive structural reform agenda is vital to unlock growth potential. Estimates suggest that reforms in the labor market, business regulation, financial sector, and governance could double non-oil potential GDP growth in the medium term. Key priorities include enhancing labor force participation, especially among women, by improving education and removing legal barriers, as well as reforming public sector hiring to boost productivity. Improving vocational training programs can align skills with market needs, while simplifying regulations and reducing bureaucratic obstacles will encourage formal economy participation and support private sector development.
Electricity sector reform is also critical given how chronic power shortages and inefficiencies weigh on productivity and economic growth. The authorities are encouraged to speed up their efforts to improve billing and collection. Once collection substantially improves, achieving cost recovery will also require electricity tariff increases, with carefully calibrated subsidies targeted to low-income users.
These efforts would be supported by further combatting pervasive corruption and addressing governance weaknesses. While progress has been made in implementing the national anti-corruption strategy and improving corruption perception, significant challenges remain. Strengthening accountability in state-owned and private enterprises, complying strictly with EITI standards, enacting a Law on Transparency and Access to Information, aligning legal frameworks with international best practices, and enhancing the independence of NAZAHA are essential measures for effective enforcement and protecting economic rights. It would also enhance the effectiveness of core state functions that are critical to economic activity, such as fiscal governance and financial sector oversight.
Data deficiencies persist. Major data deficiencies in Iraq can significantly undermine the robustness of IMF surveillance by leading to incomplete or inaccurate assessments of the economic situation and possibly jeopardizing effective policy recommendations. Building on the numerous CD Iraq has received, it is essential to focus on the most pressing data gaps and incorporate pilot initiatives into disseminated data in a timely manner.
Iraq: Selected Economic Indicators, 2024–26
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[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
[2] The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.
Trump, Sudani, and Iraq’s 30% Tax — The Hidden Message!
Trump and Sudani developments: A message and severe rebuke explaining the 30% tax
After the White House announcement
US President Donald Trump sent an official letter to Iraqi Prime Minister Mohammed Shia al-Sudani on Wednesday, announcing the imposition of a 30% tariff on all Iraqi products exported to the United States, starting August 1. Trump explained in his letter that the decision came in response to what he described as Baghdad’s “unbalanced trade policies,” hinting at the possibility of raising the rate in the future if these policies continued. He expressed his country’s readiness to ease these restrictions if the Iraqi government took steps to open its markets more widely and remove trade barriers to American products, as part of what he described as “reciprocal steps towards trade balance.”
Text of the letter sent by Donald Trump to Prime Minister Mohammed Shia al-Sudani regarding the US raising of taxes on Iraqi exports.
he White House,
Washington,
July 9, 2025
To His Excellency
Mohammed Shia Al-Sudani,
Prime Minister of the Republic of Iraq,
Baghdad
Dear Mr. Prime Minister,
It is a great honor for me to send you this letter, which demonstrates the strength and commitment of our trade relationship and the fact that the United States has agreed to continue working with Iraq, despite a large trade deficit with your great country. However, we have decided to move forward with you, but only through more balanced and equitable trade.
Therefore, we invite you to participate in the exceptional economy of the United States, the largest market in the world by far. We have had years of discussions about our trade relationship with Iraq, and we have concluded that we must move away from these long-standing and very persistent policies, which have caused a trade deficit through Iraq's tariffs, non-tariff policies, and trade barriers.
Our relationship to date has, unfortunately, been far from reciprocal. Effective August 1, 2025, we will impose a 30% tariff on all Iraqi products shipped to the United States, separate from any other sectoral tariffs. Transshipped goods to avoid the higher tariff will also be subject to this tariff.
Please understand that the 30% rate is far less than what is needed to close our trade deficit with your country. As you know, if Iraq or companies within your country decide to build or manufacture products in the United States itself, there will be no tariffs. We will then do everything we can to expedite approvals quickly, professionally, and orderly—in just weeks.
If, for any reason, you decide to raise your tariffs, any increase you make will be added to the 30% rate we impose. Please understand that these tariffs are necessary to correct years of unfair policies that have created an unsustainable trade deficit against the United States. This deficit poses a significant threat to our economy and, indeed, our national security!
We look forward to working with you as a trading partner for many years to come. If you are willing to open your currently closed markets to the United States and eliminate your tariffs, non-tariff policies, and trade barriers, we will consider—perhaps—amending this letter. These tariffs could be adjusted up or down, depending on our relationship with your country. You will never be disappointed with the United States of America!
Thank you for your interest in this matter!
With best wishes,
I remain, most sincerely,
Donald J. Trump,
President of the United States of America
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In response to Al-Sudani, Washington tells Shafaq News: Iraq is responsible for its own security and plays an important role in the region.
The US State Department said on Tuesday that the United States and Iraq "maintain a strong partnership based on shared interests," stressing continued coordination on counterterrorism and supporting economic growth, despite statements by Iraqi Prime Minister Mohammed Shia al-Sudani warning that disagreements could "undermine the relationship" between the two sides.
A ministry spokesperson told Shafaq News Agency, "Iraq plays an important role in ensuring stability in the region, and Washington continues to work with Baghdad on the basis of respect for sovereignty and shared concerns."
The spokesman also commented on Iraq's acceleration of a radar system deal with South Korea, saying, "Iraq, as a sovereign state, is responsible for its own security and has chosen to cooperate with the United States to enhance many aspects of security."
The Iraqi Prime Minister had previously indicated in an interview with the BBC that relations with Washington were beset by disagreements that "could potentially undermine the relationship." He also revealed that a deal with Seoul to purchase advanced radar systems was being accelerated, amid recent regional tensions.
According to informed sources, Iraq is working to finalize a deal to purchase South Korean radar and air defense systems, the Cheongsong-2 (M-SAM II), under a contract worth approximately $2.8 billion. The deal will supply medium-range batteries, including launchers, radars, and fire control systems, with the aim of covering all of Iraqi airspace.
Iraq's air defense capabilities remain limited, having declined sharply since 2003. Iraq currently relies on long-range AN/TPS-77 radars and a range of short-range systems to defend sensitive sites. Experts consider this coverage "incomplete" and unable to fill technical and operational gaps across the country.
Iraq's actions coincided with the latest round of violence between Iran and Israel, prompting Baghdad to seek multiple sources of arms to improve its warning and interception capabilities.
Trump's tax hits Iraq's economy hard... 3 urgently needed courses of action
International Economics Professor Nawar Al-Saadi explained on Wednesday that the tariffs imposed by US President Donald Trump on Iraq will have a compounding impact on the domestic economy. While he expected this move to be the beginning of a restructuring of the trade relationship between Washington and Baghdad, he called for swift action in three directions following this decision.
Al-Saadi told Shafaq News Agency, "The impact of this decision on the Iraqi domestic economy will be complex. On the one hand, the few Iraqi exporters who export their products to the US market will be harmed, even if the total quantities are limited. However, the most dangerous message here is that Iraq does not yet have a diverse or strong export base that allows it to negotiate or maneuver."
He explained that "local production that can compete in foreign markets is still minimal, and Iraqi exports still rely on oil for more than 90% of the country's exports. This means that any restrictions on non-oil exports, even if they are imposed by one party, reveal the weakness of the entire economic structure."
On the international level, Al-Saadi pointed out that "the decision affects Iraq's reputation in international markets, as the imposition of such fees is not only for purely commercial reasons, but is usually linked to political considerations or US assessments of Iraq's commitment to trade standards, its regional role, or even its position on US sanctions against parties such as Iran or Russia."
He added, "In other words, this step could be the beginning of a broader tightening or redrawing of the trade relationship between Washington and Baghdad within a broader political framework. Hence, the repercussions of the decision could extend to Iraq's relations with other partners, both in the West and in the region."
Accordingly, Al-Saadi believes that "Iraq needs to take swift action in three directions: first, through a direct diplomatic channel with Washington, to clarify the negative impacts of the decision and work to either exempt certain goods, reduce the percentage, or postpone implementation."
The second approach, according to Al-Saadi, is "through diversifying trade partnerships and expanding the export base to alternative markets, such as China, India, Turkey, and even the Gulf states." He explained that "this step requires reforming industrial policies and direct support for local products to qualify for export."
The third approach is "through building a clear national trade policy based on protecting Iraq's economic interests, working to reduce dependence on any international party, and activating bilateral and regional trade agreements, especially since Iraq currently suffers from the absence of an effective trade policy that reflects its interests in foreign negotiations."
The international economics professor concluded his remarks by saying, "This decision should be an opportunity for Iraq to review its economic reality and understand that an economy dependent on oil alone cannot withstand international transformations or political tensions for long, and that building a diversified, productive economy is not a luxury but an urgent necessity."
Earlier today, US President Donald Trump announced the imposition of 30% tariffs on Iraq, Algeria, and Libya.
According to Reuters, Trump issued a series of letters regarding the imposition of tariffs on six countries, including Algeria, Brunei, Iraq, Libya, Moldova, and the Philippines.
The letters call for imposing tariffs of 30% on Algeria, 25% on Brunei, 30% on Iraq, 30% on Libya, 25% on Moldova, and 25% on the Philippines.
The House of Representatives will hold its first session of the second legislative term next Saturday.
Reciting verses from the Holy Quran
Agenda
Session No. (1)
Saturday 12/June/2025
Al-Nawar session
Affairs Department
First: Voting on the proposed law of the Iraqi Programmers Syndicate. Labor and Civil Society Organizations Committee, Legal Committee), (26) articles.
Second: Voting on the draft law of mental health. (Health and Environment Committee), (42) articles.
Third: Voting on the draft law of protection from the harms of tobacco. Health and Environment Committee), (21) articles.
Fourth: First reading of the proposed law of the Union of Private Hospitals in Iraq. Health and Environment Committee), (8) articles
Fifth: Report and discussion of the second reading of the proposed law amending the first amendment to the Law of the National Authority for Nuclear, Radiological, Chemical and Biological Control No. (1) of 2024. (Health and Environment Committee).
Sixth: Report and discussion of the second reading of the proposed law amending the third amendment to the Law on Compensating Those Affected Who Lost Parts of Their Bodies as a Result of the Practices of the Former Regime No. (5) of 2009, as amended. (Martyrs, Victims and Political Prisoners Committee).
Seventh: Report and discussion of the second reading of the draft law on the Republic of Iraq's accession to the Convention Amending the Convention on the Physical Protection of Nuclear Material (Foreign Relations Committee, Health and Environment Committee).
The session begins at one o'clock in the afternoon
First Iraqi comment on Trump's tax: Sudan's measures are urgent, oil is exempt
link
The Ministry of Trade confirmed on Wednesday that Iraqi exports to the United States will not be affected by the new 30% customs duty. While noting that oil exports are exempt from duties and represent the vast majority of exports to the US, the Ministry indicated that the government has taken a wise, proactive step by responding quickly with urgent orders to boost trade with Washington.
Iraq's non-oil exports to the United States are minimal, and US tariffs may indirectly impact global oil prices and, consequently, government revenues from oil sales, which is an indirect impact," Ministry of Trade spokesman Mohammed Hanoun told the official agency.
He added, "Iraq is exempt from duties on oil exports, which represent the vast majority of its exports to the United States."
He continued, "The impact of the tariffs could be felt on global oil prices and may lead to a relative decline, which reinforces the importance of government measures to support the expansion of non-oil imports."
He noted in his remarks that "rising global inflationary pressures are putting pressure on oil markets and changing the rules of supply and demand, leading to a potential decline in the price of crude oil, which would impact economic growth and the state budget."
He stressed that "the government had previously taken a wise, proactive step by responding quickly with urgent orders to enhance trade exchange with Washington through banking coordination and political negotiations with Washington in an attempt to restore balanced trade dialogue." He explained that "the US decision to impose a 30% customs duty is based on a bilateral trade deficit and not on an increase in duties on the part of Iraq."
He concluded, "The urgent government measures, headed by Prime Minister Mohammed Shia al-Sudani and the committee tasked with his mission, aim to mitigate any potential repercussions and promote the greater interests of the national economy."
Iraq's first response to Trump's message and increased customs duties
On Wednesday, the financial and economic advisor to the Iraqi Prime Minister, Mazhar Mohammed Salih, commented on US President Donald Trump's letter to Iraq and the customs duties.
Saleh told Shafaq News Agency, "The US President's recent letter to the Iraqi government carried clear indications of a positive trend toward strengthening the trade and investment partnership between the two countries. It is clear from the contents of the letter that the US administration seeks to expand the horizons of economic cooperation and open new windows for the exchange of benefits between two countries linked by long-term strategic relations, most notably the 2008 Strategic Framework Agreement."
He added, "Although Iraqi exports to the United States are almost exclusively crude oil, which does not exceed 200,000 barrels per day and has an annual value of approximately $4.5 billion—exports that are essentially exempt from the tariffs previously imposed by President Trump—the American message hinted at the possibility of imposing a 30% tariff, which does not seem logical in light of the absence of other actual Iraqi exports to the US market that would warrant such a measure."
He continued, "In contrast, the Iraqi market imports approximately $1.5 billion worth of American goods and services annually, ranging from engineering and electrical equipment, spare parts, precision instruments, civil aircraft, digital technologies, advanced logistics services, as well as automobiles and agricultural products."
Saleh pointed out that "these imports, despite their relatively modest size, are of strategic importance given the support they provide to the production and service sectors, particularly given their quality, durability, and technological advancement."
He believed that "what can be concluded from the White House message is that it paves the way for expanding the scope of trade cooperation between the two countries by encouraging quality imports from the United States, particularly in areas that serve Iraq's goals of sustainable development, such as renewable energy, information technology, and high-quality capital and consumer goods."
He emphasized, "This trend comes at a time when Iraq is seeking to diversify its national economy and free its trade balance from excessive reliance on oil. Such cooperation with an advanced global economy like the United States could contribute to restructuring Iraqi imports in a way that enhances efficiency, effectiveness, and productivity, rather than expanding the import of luxury goods or low-value-added goods."
Saleh added, "In this context, we cannot fail to mention that Iraq invests nearly half of its foreign exchange reserves in US Treasury bonds, which reflects the level of mutual trust and is a prominent indicator of the strength and stability of the financial account in Iraq's balance of payments."
He added, "This investment is also an important pillar in managing bilateral financial relations, enhancing Iraq's ability to continue developing its resources and employing them to support its economic stability."
The Iraqi Prime Minister's financial and economic advisor concluded by saying, "The American message should not be interpreted narrowly or construed as a commercial threat. Rather, it presents a strategic opportunity to build a broader economic partnership based on shared interests, mutual respect, and maximizing development returns for both parties."
Earlier today, US President Donald Trump announced the imposition of 30% tariffs on Iraq, Algeria, and Libya.
According to Reuters, Trump issued a series of letters regarding the imposition of tariffs on six countries, including Algeria, Brunei, Iraq, Libya, Moldova, and the Philippines.
The letters call for imposing tariffs of 30% on Algeria, 25% on Brunei, 30% on Iraq, 30% on Libya, 25% on Moldova, and 25% on the Philippines.
Following Trump's decision, international economics professor Nawar al-Saadi explained to Shafaq News Agency that the tariffs imposed by the US president on Iraq will have a compounding impact on the domestic economy.
He said, "The impact of this decision on the Iraqi domestic economy will be complex. On the one hand, the few Iraqi exporters who export their products to the US market will be harmed, even if the total quantities are limited. However, the most serious message here is that Iraq does not yet have a diverse or strong export base that would allow it to negotiate or maneuver."
He explained that "local production that can compete in foreign markets is still minimal, and Iraqi exports still rely on oil for more than 90% of the country's exports. This means that any restrictions on non-oil exports, even if they are imposed by one party, reveal the weakness of the entire economic structure."
Al-Saadi believes that "Iraq needs to take swift action in three directions: first, through a direct diplomatic channel with Washington, to clarify the negative impacts of the decision and work to either exempt certain goods, reduce the rate, or postpone implementation."
The second trend, according to Al-Saadi, is "through diversifying trade partnerships and expanding the export base to alternative markets, such as China, India, Turkey, and even the Gulf states," noting that "this step requires reforming industrial policies and direct support for local products to qualify for export."
The third approach is "through building a clear national trade policy based on protecting Iraq's economic interests, working to reduce dependence on any international party, and activating bilateral and regional trade agreements, especially since Iraq currently suffers from the absence of an effective trade policy that reflects its interests in foreign negotiations."
Nechirvan Barzani discusses developing bilateral relations with the Venezuelan ambassador.
Nechirvan Barzani discusses developing bilateral relations with the Venezuelan ambassador.
Kurdistan Region President Nechirvan Barzani met with Venezuela's Ambassador to Iraq, Arturo Anibal Gallegos Ramirez, to discuss ways to strengthen and develop relations between Venezuela and Iraq.
A statement issued by the Kurdistan Region Presidency stated that the meeting also touched upon the general situation in Iraq and the Kurdistan Region, as well as the latest developments in the region.
The statement added that the importance of maintaining stability and security in the region and the need to resolve disputes and outstanding issues through peaceful means were emphasized.
Baghdad and Erbil discuss unifying procedures for the entry of goods and merchandise imported into Iraq.
Baghdad and Erbil discuss unifying procedures for the entry of goods and merchandise imported into Iraq.
The Iraqi Ministry of Planning announced that the Central Organization for Standardization and Quality Control held a meeting with a delegation from the Kurdistan Region to standardize procedures for the entry of goods and commodities imported into Iraq.
The Ministry's media office said in a statement that "the Diwani Order Committee (No. 79 of 2024) discussed mechanisms for implementing the decision of the Ministerial Council for Economy regarding the standardization of procedures for the entry of goods and commodities imported into Iraq, in light of the agreement signed between the federal government and the Kurdistan Regional Government."
It explained that "the meeting was chaired by the head of the Central Organization for Standardization and Quality Control, Fayyad Mohammed Abdul, in the presence of an official delegation from the Kurdistan Regional Government. The practical steps to implement the provisions of the agreement were discussed, which aims to ensure the smooth flow of trade and simplify procedures at border crossings by standardizing specifications and quality inspections for imported goods."
Losing privatization
Any talk about privatization during this period is a losing and useless matter because it is too late.
Twenty years have passed since important calls to privatize idle and losing companies and factories. Why?
To understand the meaning of privatization with a simple definition, it is the transfer of idle government or public factories and plants that were and still are a burden on the working budgets to the private sector to revive them and operate them after the management of these government factories was unable to restart them and make them productive, after a disastrous failure faced by those administrations under the pretext that the production costs are high and they are unable to achieve them, and the reason was certainly
Paul Bremer's policy of opening up the market without addressing the effects of indiscriminate imports on domestic production resulted in loss-making industries. These factories and companies continued to consume budgets without producing any output, leading to disguised, flabby unemployment that has been, and continues to be, a burden on the state.
Economic experts have called for its privatization, convinced that the private sector is capable of operating it and making it productive and profitable.
An article by my colleague Thamer Al-Haimus caught my attention, in which he raised the issue of privatization and titled it "National Privatization." As someone who is interested in economic affairs and has followed the stages of challenges that the Iraqi economy has gone through, I find that merely thinking about privatization is nothing more than an invitation to loss.
The reasons are many and varied, foremost among them is the passage of 20 years without any benefit with the accumulation of losses, and secondly, the decline in the productive life of these factories and companies has been eaten away by time, and thirdly, they, the factories, have become unfit to keep pace with the great development left behind by globalization and the third technological revolution, followed by the fourth, the science of technology, robotics and artificial intelligence. So, what privatization?
Are we talking?
The technological and technical development achieved by China and some of the major industrial countries has reached an unimaginable level. So what is the point of privatization in an age of modern technology and future jobs?
These companies and factories have become old and have gone out of service automatically without any decision, and the need dictates how to liquidate them and benefit as much as possible.
Some of these sites are being invested in modern production and service fields that are in line with the nature of the stage.
That is why I titled this article “Lossy Privatization.” Therefore, the liquidation must be studied and organized according to basic needs.
Based on the above, the state-private partnership (PPP) approach represents a reasonable model of partial or participatory privatization, a model that is currently prevalent worldwide without the state losing its assets. This model maximizes production, productivity, and the efficiency of technological development and financing by involving market forces in national industrial activity. However, the country needs to enact a law on state-private partnerships, which remains a hot topic of debate in the House of Representatives to this day.
Meeting between Americans and Sami Specter in Baghdad
Comment from the Washington Embassy
The US Embassy in Baghdad announced on Wednesday that Chargé d'Affaires Fagin attended an important meeting with Finance Minister Taif Sami, reaffirming the United States' commitment to its partnership with Iraq.
US Chargé d'Affaires Fagin attended an important meeting with Finance Minister Taif Sami Mohammed, as economic diplomacy is a fundamental pillar of the US-Iraqi partnership. The United States is committed to partnering to support Iraq's economic growth.
Demonstrations in Sulaymaniyah protesting the deteriorating living conditions and delayed salaries.
Baghdad Today correspondent reported, on Tuesday evening (July 8, 2025), that popular demonstrations broke out in the cities of Ranya and Qala Diza, affiliated with Sulaymaniyah Governorate, in protest against the deteriorating living conditions and the ongoing salary crisis in the region.
Our correspondent said that dozens of young people from both cities took to the streets in angry demonstrations demanding improvements to their living conditions and the payment of overdue salaries. They asserted that "their patience has run out as the crisis continues without any real solutions."
Our correspondent noted that security forces in the area had begun moving toward the demonstration site to contain the situation, with no clashes reported at the time of writing.
IMF: Iraq's budget deficit to reach 9.2% in 2026, breakeven oil price to
rise to $84
Iraq faces the threat of a worsening fiscal deficit in the medium term due to declining oil revenues due to lower prices and increasing financing constraints. Meanwhile, the estimated crude oil price needed to balance the budget has risen by more than 55%, according to the International Monetary Fund.
Although the IMF commended Iraq's ability to maintain internal stability despite regional turmoil and global uncertainty, it expects that "financing constraints and lower oil revenues will hamper fiscal spending, casting an additional shadow over economic activity. The significant fiscal expansion in recent years has increased vulnerabilities in the country, exacerbated by the recent decline in oil prices," according to the report issued by the IMF's Executive Board on Wednesday after the conclusion of Article IV consultations.
Iraq's public finances are expected to witness a significant decline, with the general budget deficit estimated at 4.2% of GDP in 2024, expanding to 7.5% in 2025, and then 9.2% in 2026.
This comes amid a decline in oil revenues from 36% of GDP in 2024 to 31% in 2026, while public spending rose from 43.5% to 43.8% during the same period, particularly in wages and pensions, which will reach 24.5% of GDP in 2026, according to the IMF.
The Iraqi government seeks to diversify the economy and reduce its reliance on oil, which accounts for more than 90% of state revenues. Steps have been taken to strengthen non-oil sectors such as agriculture, industry, and tourism, along with measures to improve the business environment and provide guarantees to the private sector, with the goal of attracting local and foreign investment to develop these sectors.
Despite this, oil remains the country's primary source of revenue and exports, with crude oil production expected to average 3.9 million barrels per day in 2024, rising to 4.1 million barrels in the following two years. Oil exports are expected to reach 3.4 million barrels per day in 2024, rising to 3.5 million in 2025 and 2026.
According to the fund's estimates, oil revenues are expected to decline from $99.2 billion in 2024 to $84.2 billion in 2025 and then to $79.2 billion in 2026, affected by lower prices, which have fallen from an average of $80.6 per barrel last year to $65.9 per barrel this year and $62 per barrel next year.
The Washington-based international organization raised the oil price required to achieve fiscal balance in Iraq to $84 per barrel in 2024 from $54 in 2020, attributing this to the expansion of spending and weak non-oil revenues.
The price of Brent crude has fallen to around $70 per barrel currently, from over $80 at the beginning of this year.
Oil prices are under pressure due to tensions over US tariffs and concerns about a market surplus.
Bloomberg Intelligence analysis suggests a surplus of more than 1 million barrels per day will emerge in the oil market in the second half of the year. Unless the OPEC+ alliance slows the pace of production increases or demand unexpectedly improves, oil prices could remain under sustained downward pressure until the end of the year.
To avoid financial hurdles, Baghdad needs to implement fundamental reforms to increase non-oil revenues, control the public sector wage bill, and enhance non-oil growth potential by developing an ambitious structural reform agenda, according to the report.
Iraq's non-oil sector growth slowed to 2.5% in 2024 from 13.8% in 2023, according to IMF estimates released today. The slowdown is expected to deepen to just 1% growth this year before improving slightly to 1.5% next year. This reflects the fragility of the economy outside the energy sector and is in stark contrast to the government's forecast of 4% non-oil economic growth this year, according to the Iraqi Ministry of Finance in May.
A severe deficit in the non-oil account and a rise in public debt
The report indicated that Iraq's non-oil primary budget deficit will continue to be large, reaching approximately 59.3% of non-oil GDP in 2024 and gradually declining to 51.8% by 2026. The Fund also projected that government debt will jump to 62.3% of GDP in 2026, after remaining stable at 47.2% in 2024 and 2025.
The Fund also noted the elevated sovereign debt risks, which it believes require urgent policy intervention, and indicated that the authorities must control debt levels over the medium term.
The report also included the following main items:
The International Monetary Fund expects Iraq's real GDP to contract by 2.3% in 2024, before returning to growth of 3.1% in 2025 and 1.4% in 2026.
The Fund's forecasts indicate that Iraq's inflation rate will stabilize at relatively low levels, estimated at 2.7% by the end of 2024, with a slight increase to 2.9% in 2025 and 2026.
On the current account front, the surplus is expected to decline from 2.0% of GDP in 2024 to 0.2% in 2025, reaching a deficit of 1.9% in 2026. Foreign reserves will also shrink from $100.3 billion to $79.2 billion over the same period, equivalent to a decrease from 11.1 to 9.6 months of imports.
The Iraqi dinar exchange rate is expected to stabilize at 1,300 dinars to the US dollar over the next three years, remaining largely unchanged. Foreign direct investment, however, remains virtually nonexistent, at zero percent of GDP over the period until 2026.
Iraq's population is estimated at 44.4 million in 2024, with a per capita GDP of $6,183 per year. Recent data shows that the poverty rate remains at 23%, compared to 2014, indicating the need for further structural and developmental reforms.
The report showed a decline in money supply (M2) growth of 4.3% in 2024, with a relative recovery to 9.6% in 2025 and 4.9% in 2026. In contrast, credit to the private sector is expected to grow by 14.3% this year, before slowing to 5.4% and then rising again to 8.4%
Washington sanctions 22 entities in 3 countries for their ties to Tehran.
The US Treasury Department announced on Wednesday the designation of 22 entities in Hong Kong, the United Arab Emirates, and Turkey on its sanctions list for their ties to Iran.
The Treasury Department said in a statement that these entities "played a role in facilitating the sale of Iranian oil to the Islamic Revolutionary Guard Corps' Quds Force."
It stressed that it "will continue to target Tehran's sources of revenue and intensify economic pressure to disrupt the regime's access to the financial resources that fuel its destabilizing activities."
Customs: Five transit flights successfully passed through Iraq under the TIR Agreement.
The General Authority of Customs announced today, Wednesday, the successful passage of five transit flights through Iraq in accordance with the TIR Agreement, while indicating that all land transit ports have been approved by the International Road Transport Union.
The Director of Transit at the General Authority of Customs, Ihab Talib Khalifa, told the Iraqi News Agency (INA): "The electronic lock system was applied to nine experimental flights coming from Umm Qasr towards the dry port," indicating that "the monitoring was for drug shipments after the issuance of a decision to monitor drug shipments from their entry into the country until their arrival at the dry port affiliated with the Central Region Directorate in Baghdad at the General Authority of Customs."
He explained that "the shipments were tracked using a GPS system installed on an electronic lock that secures the container," noting that "the purpose of this matter is to limit smuggling and ensure the safe arrival of drug shipments for distribution, and to activate the role of oversight under the direction of the Director General of the General Authority of Customs, as we are about to introduce and track other types of shipments, including chemicals."
He continued, "The transit issue has been activated and the international TIR agreement has been implemented. Five successful flights were received and reached their destination country by passing through Iraq, which was the transit corridor." He emphasized, "This work will continue to enhance Iraq's role in international trade, as well as Iraq's strategic regional location. Work on development is also ongoing."
He explained that "through purely Iraqi efforts, and with the cooperation and logistical support provided by the Border Ports Authority from a technical standpoint, the National Data Center affiliated with the General Secretariat of the Council of Ministers, and the support of all officials, all land transit ports have been submitted to the International Road Transport Union, and all of them receive transit trucks, in addition to the ports designated for the entry of pharmaceutical shipments at the present time." He pointed out that "the TIR system will expand in the near future, stage by stage, to include shipments of chemical materials."
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