Iraq cracks down on dollar market disparity
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Iraq is moving to eliminate the gap between the official and parallel market exchange rates of the US dollar, Economic Advisor to the Prime Minister, Mudher Muhammad Saleh, revealed on Tuesday.
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The official rate set by the Central Bank of Iraq (CBI) is 132,000 dinars per $100, while the parallel market rate has hovered near 139,000 dinars in recent days—a difference the government seeks to erase.
Speaking with Shafaq News, Saleh outlined five key measures driving the ongoing convergence:
-Ban on internal dollar use: The prohibition of domestic dollar transactions, especially in real estate, has curbed the dollarization of the local economy.
-Shift to global correspondent banks: Foreign currency transfers now go through international banks, replacing the Central Bank’s former exchange window and reducing reliance on unofficial, high-cost funding.
-Inclusion of small importers in official channels: Around 60% of Iraq’s foreign trade is now financed through the formal banking system at the official rate, lowering demand in the black market.
-Expanded use of electronic payment cards: Travelers increasingly rely on foreign-currency payment cards, easing demand for cash dollars. Simplified airport procedures further support this shift.
-Price stabilization via government cooperatives: Key imports—such as consumer goods and construction materials—are distributed at the official rate through state-backed outlets, aligning monetary, fiscal, and trade policies.
Saleh concluded that with the exchange rate gap now below 4%, Iraq is entering a phase of "price convergence," where the remaining difference reflects only transaction costs.
KRG: Salaries delayed due to federal government cash shortage
The Kurdistan Regional Government announced, on Wednesday (July 23, 2025), that the delay in disbursing May salaries is due to a lack of liquidity in the federal Ministry of Finance.
"The federal Ministry of Finance informed us yesterday that it is suffering from a liquidity problem and stated that it had requested the Central Bank to provide it with cash, and it promised to provide the funds today," regional government spokesman Peshwa Hawrami told Kurdish media following the conclusion of the Kurdistan Regional Government Council of Ministers meeting, as monitored by Baghdad Today.
He added, "We are waiting for the necessary funding for May salaries to be sent today," noting that "the situation over the next few months will become clearer next week."
Hawrami continued, "There is a continuous flow of delegations between the Kurdistan Region and the federal government, along with internal and external communications to secure salaries." He noted that "the phone call between the US Secretary of State and the federal prime minister included a discussion of the importance of continuing to pay salaries to the region."
He stressed that "increasing oil production will not take long, but the protection of oil fields must be ensured," emphasizing that "the Kurdistan Region has no problem exporting oil."
The past few months have witnessed financial tensions between Baghdad and Erbil, due to the region's failure to deliver oil and non-oil revenues as stipulated in the budget law. This has led to the suspension of salary payments since May.
On July 17, 2025, the Federal Council of Ministers voted on Resolution No. (550), which stipulates the release of salaries for the region’s employees in exchange for Erbil handing over 120 billion dinars from its local revenues, in addition to delivering its oil exports through SOMO, which has actually begun to be implemented by depositing the amount in the Central Bank of Iraq, and releasing the salaries for the month of May at the beginning of this week.
Three financial files are being discussed.. A meeting is expected today between the negotiating delegations from Erbil and Baghdad.
The technical negotiating delegations representing the Kurdistan Regional Government and the federal government in Baghdad are scheduled to resume their meetings today in Baghdad to discuss financial issues and mechanisms for preparing audit budgets.
A source from the Ministry of Finance in the Kurdistan Region, who requested anonymity, told the Jebel Platform on Wednesday, July 23, 2025, that "a delegation representing the Ministry of Finance of the Kurdistan Regional Government arrived in Baghdad yesterday evening, and is scheduled to meet with its counterpart in Baghdad and discuss with him the files of expenditures, revenues, and salaries due to the Kurdistan Region for the months of June and July 2025."
According to the source, "There is a strong possibility that the two parties will agree to separate oil imports from the trial balance and submit oil-related reports in a separate file on a monthly basis."
Al-Jibal's correspondent in Baghdad said that the delegation representing the Kurdistan Region is divided into three committees, which will discuss three different topics: "the resumption of oil exports, the shortfall in the Kurdistan Region's financial share and its redress under the budget law, and the discussion of non-oil revenues and how to collect and deliver them to the federal government."
The two delegations will also discuss a number of accounting and auditing issues, according to the correspondent. A comprehensive report is expected to be prepared by both parties and submitted next week to the ministerial committee tasked with following up on the matter. It will then be submitted to the Council of Ministers for a vote at the next government meeting.
Transforming Iraq into a regional hub: Establishing a "Global Gold City" in Baghdad
The Iraqi Ministry of Trade has announced the establishment of a dedicated city for the gold and jewelry industry in the Iraqi capital, Baghdad. The aim is to localize the precious metal industry and boost local production within the country, "which will contribute to transforming Baghdad into a regional center for the gold industry and trade."
The ministry announced in a statement on Wednesday, July 23, 2025, that the Ministerial Council for the Economy had approved the proposal submitted by the Ministry of Trade to establish a "Global Gold City" in Baghdad. The ministry described the move as "strategic, aiming to localize the gold and jewelry industry within Iraq and boost local production."
Minister of Commerce, Athir Dawood Al-Ghurairi, emphasized in this regard that "the project represents a qualitative leap in the development of national industries," noting that "the city will include an integrated system that includes specialized industrial units, advanced training centers for goldsmithing according to international standards, as well as advanced markets and an exchange for gold and jewelry."
For his part, Director General of the Department of Foreign Economic Relations, Riyadh Fakher Al-Hashemi, explained that "the project aims to support the private sector and expand its contribution to the national economy," noting that "the city will be established within the integrated economic city in Baghdad, contributing to transforming the capital into a regional center for the gold industry and trade."
According to Al-Hashemi, the ministry has begun coordinating with the National Investment Commission to complete the requirements for land allocation and issue investment licenses in preparation for the project's implementation.
The Iraqi dinar reached a new record high against the dollar.
The foreign exchange market in the Iraqi capital, Baghdad, recorded a record high for the dinar against the dollar on Wednesday, reaching 1,380 dinars per dollar, compared to the previous value of 1,420 dinars per dollar. This decline, according to experts, is the result of a convergence of several internal and external factors, most notably the strict government measures taken by the Central Bank to limit speculation in the currency market, in addition to the country's growing foreign exchange reserves due to the rise in oil prices , and enhanced cooperation with international financial institutions to control the movement of the dollar within the country.
The exchange rate of the dollar on the parallel (unofficial) market reached 1,380 Iraqi dinars to the dollar, the first time in two years. The official rate, set by the Central Bank of Iraq, is 1,310 Iraqi dinars to the dollar. The dollar has been fluctuating in price over the past period, reaching 1,700 dinars, while it has been stable for a long time at 1,450,000 dinars.
Financial and economic expert Rashid Al-Saadi told Al-Araby Al-Jadeed, "The recent decline in the dollar exchange rate against the Iraqi dinar is a direct result of a package of policies and measures adopted by the Central Bank of Iraq, in cooperation with other state institutions. These include restricting illegal foreign transfers, adopting an official transfer platform, and enhancing the flow of foreign currency through the Central Bank's window. This has helped meet actual demand for the dollar and narrow the gap between the official rate and the parallel market rate."
Al-Saadi explained that "the increase in foreign currency reserves, as a result of improved global oil prices and continued coordination with the US Treasury Department to monitor dollar movements, has given greater confidence to the markets and contributed to calming speculation. Maintaining this decline requires continued transparency in the currency sales window, expanding oversight measures for banks and exchange companies, and revitalizing the local production sector to reduce reliance on imports, thus reducing pressure on the dollar."
He added, "The impact of the dollar's decline on local markets has twofold consequences. On the one hand, the prices of some imported goods may decline, which would positively impact citizens' purchasing power. On the other hand, some commercial activities that relied on the exchange rate differential in the parallel market to generate profits may be harmed."
The financial and economic expert emphasized that "what we need today is long-term stability based on genuine economic reforms, not just a temporary improvement in the exchange rate. The continued decline in the dollar exchange rate against the Iraqi dinar requires a set of sustainable measures that enhance confidence in monetary policy and maintain market balance. To prevent this decline from being merely a temporary phenomenon, the government and the Central Bank must work to deepen financial reforms and expand the scope of structural solutions in the currency market."
For his part, Mazhar Mohammed Saleh, financial and economic advisor to Prime Minister Mohammed Shia al-Sudani, said in media statements on Wednesday that the relevant decisions and policies taken by the Central Bank and the government will lead to narrowing the gap between the official dollar price and its price on the parallel market, in a path that may lead to reaching the stage of "congruence" between the two prices. He said in a press statement to the local Shafaq News Agency that "the gap between the official and parallel prices approaching less than 4% indicates entering the congruence stage, as this difference only represents the cost of transactions."
In early 2023, Iraq announced the adoption of an electronic platform to monitor dollar sales and money laundering operations. This followed warnings issued by the Federal Reserve (the US central bank) and the Treasury Department's sanctioning of several local banks for their involvement in suspicious activities. A bank statement stated that "it was decided to expand the external transfer channels for local banks to include new currencies: the Jordanian dinar and the Saudi riyal, and to allow Iraqi banks to finance trade with Turkey in euros, after previously being restricted to using them with European Union countries. Transfers are also available in dollars, Emirati dirhams, Chinese yuan, and Indian rupees."
Previous decisions by the US Treasury Department to impose sanctions on 18 Iraqi banks for financial transactions with Iran and others linked to money laundering operations triggered a swift reaction within Iraq, leading to a decline in the value of the dinar and a rush of depositors to the sanctioned banks to withdraw their dollar holdings. With reserves exceeding $113 billion in the United States, Iraq relies heavily on Washington's goodwill to ensure that its oil revenues and cash are not subject to US sanctions.
Last October, the US government rejected an Iraqi request for $1 billion in cash from the Federal Reserve using Iraqi funds generated from oil revenues. The US government opposed efforts to curb excessive dollar circulation and halt illicit cash flows to countries sanctioned by the US Treasury.
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Parliamentary Finance: Announcing bonuses and promotions without linking them to budget schedules
Member of the Parliamentary Finance Committee, MP Moeen Al-Kadhimi, confirmed on Wednesday that bonuses and promotions will be issued without linking them to budget schedules.
Al-Kadhimi said in a statement followed by (IQ): "In the coming period, there will be an instruction from the Prime Minister to the Ministry of Finance to issue bonuses and promotions, and not link them to budget schedules."
He stressed that "these matters are not related to budget schedules."
The necessity of holding perpetrators of attacks on oil fields accountable, and American concerns about passing the Popular Mobilization Law.
Details of the Rubio-Sudani call
US State Department spokeswoman Tammy Ross reported details of a call between US Secretary of State Marco Rubio and Iraqi Prime Minister Mohammed Shia al-Sudani on Wednesday. The call included an emphasis on the need for the Iraqi government to hold accountable those who carried out attacks on oil fields operated by US companies in Kurdistan and to prevent such attacks in the future. The bilateral discussion also touched on the need to pay salaries to Kurdistan employees and resume oil exports via the Iraq-Turkey pipeline, known as the Ceyhan pipeline. Rubio also expressed what he described as serious US concerns about the Popular Mobilization Forces (PMF) bill, stressing that its legislation would consolidate Iranian influence and undermine Iraqi sovereignty.
Secretary of State Marco Rubio spoke with Iraqi Prime Minister Mohammed Shia al-Sudani regarding recent attacks on energy infrastructure, including those operated by U.S. companies, and emphasized the importance of the Iraqi government holding perpetrators accountable and preventing future attacks. The Secretary highlighted the importance of regular payment of salaries to Iraqi Kurdistan Region employees and the resumption of oil exports through the Iraq-Turkey pipeline. The Secretary also reiterated serious U.S. concerns regarding the Popular Mobilization Forces (PMF) bill currently before the Council of Representatives, emphasizing that any such legislation would entrench Iranian influence and armed terrorist groups and undermine Iraqi sovereignty.
Iraq is approaching Trump's table and is no longer in the hands of the US Undersecretary of State.
Analysis by Dr. Ali Agwan
An Iraqi expert said that the US Secretary of State's call today with Prime Minister Mohammed al-Sudani regarding the Popular Mobilization Forces and Kurdistan's salaries indicates that Iraq is no longer a secondary issue in the hands of the deputy minister or a lower-level official. It is likely to become a clear priority for President Trump himself, following changes affecting the region's economy, oil, and security.
Ali Agwan – Professor of International Relations and Strategic Affairs
ecretary of State Marco Rubio's call with the Prime Minister indicates that the Iraq file has shifted from the Assistant Secretary of State for Near Eastern Affairs to the Secretary's desk, and may later be transferred to the President's desk! This means that the Iraqi file has shifted in the American strategic mind from a secondary issue to a diplomatic one with a direct security and economic impact in the coming period.
2- The targeting of foreign oil platforms in Iraq prompted the US Secretary of State to discuss two main options with the Prime Minister: Either the Iraqi government intervenes and does what is necessary to protect the oil sector and foreign companies in Iraq from drone attacks, or we do what is necessary and protect this sector as part of our national interests.
3- The US embassy's description of the Popular Mobilization Forces (PMF) legislation as a law that serves Iran's agenda in the region places al-Sudani in a complex zero-sum confrontation with his internal partners and Iran itself. It's as if the US wants to tell al-Sudani that we want him to be clear with us. There's no room for maneuver: Either side with Iran and support this legislation, or side with us and block it!! They want to tell him: Do you want to be on Iran's side so that you can justify including Iraq in a new package of harsh sanctions? Or do you want to side with us so that we can give Iraq a special status, isolated from the policies of maximum pressure against Iran?
4- Informing Al-Sudani of the necessity of delivering the region's salaries without delay indicates that the region is going through difficult and pivotal moments related to its economic reality. The United States realizes that it is almost impossible to resolve the oil crisis between Baghdad and Erbil in the manner Baghdad desires, given that there are American and non-American companies that have 50-year contracts with Erbil independently of Baghdad. The United States does not want to see the collapse of more than thirty years of cooperation with the region due to pressure from the Iraqi government to hand over the region's oil to Baghdad in exchange for Baghdad handing over the region's salaries. The minister wants to tell Al-Sudani, "Give the salaries to the region and do not get involved in the fine details with them, because a solution is impossible now!"
Does this constitute interference in Iraq's internal affairs? Yes, but who can tell the United States not to interfere and prevent them from doing so?
The Iranian delegation in Baghdad urges the government to implement the decision to "expel" US forces.
Iran's official IRNA news agency announced on Wednesday (July 23, 2025) that the Iranian delegation visiting the capital, Baghdad, "urged" the Iraqi government to expedite the implementation of the decision to "expel" US forces from Iraq to preserve the country's sovereignty and prevent its territory from being exploited to target Iran.
The agency reported, as translated by Baghdad Today, that "the spokesman for the Iranian Parliamentary Committee for Security and Foreign Relations, Ebrahim Rezaei, told it that the Iranian delegation visiting Baghdad "urged" the Iraqi government to implement the decision taken by the Iraqi parliament in 2020 to expel US forces from the country immediately."
He continued, "The Iranian delegation submitted a report to the Iraqi government on the 12-day war waged by Israel and the United States against Iran, proving that Iraqi airspace was exploited by Israel and the United States to launch their attacks on the Islamic Republic," he said.
It's worth noting that "an official Iranian delegation is visiting the capital, Baghdad, to discuss relations between the two countries, coinciding with increasing US pressure on the government to halt cooperation with Iran."
Sudanese people are in a state of confusion: There is not enough money for salaries and projects despite increased oil revenues.
Warning from expert Ali Daadoush
Economic expert Ali Daadoush confirmed that Iraq's oil revenues increased by $337 million, reaching $6.698 billion last month, compared to $6.361 billion in May. He noted that total public revenues for June reached 9.1 trillion dinars after calculating non-oil revenues estimated at 400 billion dinars, an amount that barely covers the salaries of employees, retirees, and welfare network beneficiaries. Daadoush indicated that government spending, both current and investment, requires between 12 and 16 trillion dinars, which will force the government to borrow domestically to cover the current financial deficit, or temporarily halt funding for investment projects, creating further negative impacts on the local economy.
The sum of 9 trillion barely covers the wage bill for state employees and retirees, including those registered with the social security network.
As for the impact on the investment budget, Iraq needs between 12 and 16 trillion dinars to cover government spending, both current and investment.
Consequently, Iraq will need to finance the investment budget through domestic or foreign borrowing, or postpone spending on these projects. This will negatively impact the local economy.
According to #energy sources,
Iraqi oil export revenues increased by about $337 million last June, bringing total revenues to about ((6.698)) billion dollars, compared to $6.361 billion last May.
In Iraqi terms, oil revenues for June amounted to (8.7) trillion dinars, and if non-oil revenues are estimated at about (400) billion dinars, the total for June is only (9.1) trillion dinars.
Enough to #cover_state_employees_
#Oil_Blessing
#Financial_Deficit
#Public_Debt
#Cash_Financing
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