Iraq's new taxes and customs tariffs cause unrest among merchants
The government recently approved a broader fiscal strategy to increase non-oil revenues and reduce the budget deficit
Iraqi traders protest outside the Baghdad Chamber of Commerce on Thursday against new taxes and customs tariff. Aymen Al Ameri / The National
The video for this My FX Buddies Blog is below here:
Anger is mounting in Iraq over new customs tariffs and taxes imposed by the government since the beginning of this year; a move authorities say was prompted by a slump in oil prices – the country’s main source of revenue.
Iraq, Opec’s second-largest producer after Saudi Arabia, has oil reserves of about 153.1 billion barrels and is highly reliant on crude revenue, which make up about 95 per cent of its income.
Oil prices on the international market have been bearish since last year due to several factors, including oversupply and Opec’s decision to maintain output levels.
As part of measures to compensate for losses and meet high financial obligations, Iraq's government approved a broader fiscal strategy to increase non-oil revenue and reduce the budget deficit.
The measures include reconsidering public expenditure such as salaries and allowances of senior employees. It has also reinstated a 20 per cent sales tax on mobile phone and internet recharge cards, which was initially introduced in 2015 and then cancelled in 2022. Customs tariffs have been also increased, from between one and 5 per cent to between 6 and 30 per cent.
The increased levies prompted traders to stage a demonstration in the Baghdad's commercial district on Thursday. A similar outpouring of anger last week among traders in neighbouring Iran after a record drop in the Iranian rial, has sparked nationwide protests against the government over economic hardship.
Saad Al Kubaisi, a goldsmith and owner of a gold import company, was among dozens of merchants protesting against the Iraqi government's new measures outside the Baghdad Chamber of Commerce building in one of the capital’s main wholesale markets.
Tariffs on imported gold were increased from 250,000 Iraqi dinars (about $190) a kilogram to as much as 12,000,000 dinars, Mr Al Kubaisi told The National.
“This is a very, very unfair percentage,” he said, saying he cancelled an order from Dubai last month when the government announced the measures. “Our work is totally paralysed,” he added.
“These are impulsive decisions. This is gold, who accepts paying more than its price on the international market?” he added. “I don’t know how they approved this tariff without consulting us.”
Angry shouts filled the air as merchants gathered in Al Nahar Street, the main hub for gold, clothing and accessories businesses in Baghdad’s bustling commercial area. They accused the authorities of strangling businesses by imposing financial burdens and red tape.
“No, no to the new tariffs,” some chanted. Other held banners that said: “High tariffs do not protect the market, they disrupt it”, and “We want economic solutions, not new restrictions that cripple imports and inflate prices.”
The Iraqi economy faces significant challenges including corruption, poor service delivery and a lack of job opportunities, that have fuelled widespread protests since the 2003 US-led invasion that toppled Saddam Hussein.
The International Monetary Fund estimates that Iraq requires an oil price of $84 a barrel to balance its budget due to rising spending, mainly on the public sector which is characterised by significant politically-driven expansion, particularly in security.
Benchmark prices showed a slight rise on Thursday, with Brent crude futures at $60.55 a barrel and West Texas Intermediate reaching $56.57, according to Reuters.
Critics of the government's new taxes and tariffs say they disproportionately affect vulnerable populations and exacerbate economic instability in Iraq.
The new tariffs will “cripple the Iraqi economy and the poor Iraqi family will be the only one to suffer because we will add that to prices”, Mahmoud Abbas, a food merchant, told The National.
He said the tariff he paid of 4 million dinars for each container he imports has been increased to 30 million dinars.
“Who will be affected? The people, mainly the poor because you can’t stop eating,” he added, calling on Prime Minster Mohammed Shia Al Sudani to reconsider the “wrong decision”.
He has goods worth $7 million to $8 million waiting outside Iraq, he said.
The looming economic crisis adds to the challenges that Iraq's next government, which is being formed following the November 11 general election, will have to deal with, in addition to other political and security issues.
Economic shock: The story of taxes and their impact on Iraqis
The tax and customs duty decisions recently implemented in Iraq have reopened the file of financial and economic reform on a wide scale, amid escalating popular and commercial controversy between those who see them as an inevitable necessity to bridge the financial deficit, and those who warn of their inflationary effects and direct repercussions on the livelihood of citizens and the stability of the market.
Between the government's denial of imposing "new taxes" and its assertion that what is happening is the organization of tax collection through modern electronic systems, experts' opinions diverge between a cautious supporter and a pessimistic critic.
These developments come at a time when the Iraqi economy is suffering from accumulated structural imbalances, most notably the almost complete dependence on oil revenues, high operating spending and declining purchasing power, in addition to a turbulent regional and international environment that is witnessing economic contraction and trade wars that have been reflected in tariff and tax policies in many countries.
Decision motives
In this context, economist Osama Al-Tamimi explains that the government resorts to imposing taxes as one of the solutions to address the scarcity of public revenues and the inability of oil revenues to cover public spending, noting that maximizing non-oil revenues has become a strongly proposed option, foremost among them taxes.
Al-Tamimi told Shafaq News Agency that the recent taxes included gold, imports of electric cars and gasoline-powered cars, while “leaks” were raised about including medicines at limited rates, but the Ministry of Health denied this.
He emphasizes that the government cannot resort to imposing taxes on food items because they directly affect the citizen's livelihood and daily life, especially in light of the state's efforts to secure the ration card to guarantee a minimum standard of living for various social classes.
Official denial
For his part, Iraqi parliament member Ahmed Karim Al-Dalfi confirms that "there are no new taxes on imported goods at the present time," explaining that what is happening is "collecting tax deposits and converting them later into taxes through the ASYCUDA system."
During his interview with Shafaq News Agency, Al-Dalfi stressed his categorical rejection of imposing any taxes on basic goods and services for citizens in various fields, in a position consistent with recent government statements that denied imposing new fees or taxes, and attributed the ongoing controversy to the circulation of old clips or a misunderstanding of the nature of the new procedures.
Customs context
As for the economist Safwan Qusay, he places what is happening in Iraq within a broader global economic context, pointing out that the world is witnessing a kind of contraction, coinciding with the US administration’s imposition of tariffs on foreign imports since the middle of last year, and the accompanying trade wars between the United States, China, Canada and Japan, as well as the review by the Gulf States and others of tariff policies as dollar markets.
Qusay adds, during his interview with Shafaq News Agency, that Iraq, with the implementation of the ASYCUDA system at all border crossings, will not allow the exit of dollars except for official and legitimate commercial purposes, indicating that this system contributes to reducing customs evasion, manipulation of invoice values, and payment of illegal dues for goods that used to enter the country without legal cover.
Qusay acknowledges the current challenge of some unregulated traders spreading fears of price increases and harming the consumer, noting that a limited increase may occur, but he calls on legitimate traders to rely on the official dollar through the electronic platform to cover imports, which will reduce pressure on the market.
Qusay also affirms that the Central Bank of Iraq’s reserves are the highest in its history and are capable of defending the dinar’s exchange rate, and there are no fears of supply disruptions, provided that the economic regulation of the commercial sector is supported and speculation is curbed.
The shock of reform
For his part, economist Ahmed Abdel Rabbo believes that the recent price hikes and taxes represent a reform measure that should have been taken about ten years ago, describing it as a "belated" measure.
Abd Rabbo, speaking to Shafaq News Agency, points out that the full implementation of the procedure could generate revenues of up to 7 trillion dinars for the state treasury, but the problem lies in its not being applied comprehensively to all border crossings.
He emphasizes that Iraq urgently needs to proceed with economic reforms, even if they are uncomfortable for citizens, recalling that previous governments burdened the economy with unhelpful and unproductive financial burdens.
He warns that ignoring reform could lead, in the coming years, to the government's inability to pay employee salaries, making economic reform "a necessity, not an option."
He points out that the implementation of the new tax system, starting from January 1, 2026, and its inclusion of imposing varying taxes on about 6,000 imported goods, caused a shock in the market, as some traders stopped selling their goods in anticipation of price increases, while others refrained from importing while waiting for the picture to become clear, which led to a rush on hard currency and some resorting to the parallel market and price increases.
But Abd Rabbo expects this rise to be temporary, especially after the Central Bank’s recent statement confirming the stability of the parallel dollar exchange rate and the impossibility of manipulating it.
inflation and chaos
In contrast, economist Bassem Jamil Antoine offers a more pessimistic reading, warning that these taxes create monetary inflation that leads to a rapid rise in prices, while it will be difficult to reduce them later.
Antoine, speaking to Shafaq News Agency, describes what is happening as "disguised speculation," noting that the current rise in prices is not based on real economic justifications, but rather has been exploited by speculators, and that the rise in the dollar is part of this process.
He concludes by emphasizing that the purchasing power of citizens is already low, at a time when the government is burdened with heavy debt, predicting that the state of chaos and instability will continue in the foreseeable future unless the structural causes of the crisis are addressed.
An economic report reveals the reasons behind the Central Bank's refusal to devalue the dinar.
Economic expert Nabil Al-Marsoumi revealed on Thursday the fundamental reasons that drive the Central Bank of Iraq to refuse to reduce the value of the dinar against foreign currencies, warning of catastrophic repercussions that could affect the social and economic structure of the country if such a decision is taken .
Al-Marsoumi said in a Facebook post, which was followed by Al-Sa’a Network, that “the poor class is more affected by economic shocks, as devaluing the currency weakens their purchasing power and reduces real wages, which increases their suffering and raises the prices of basic commodities .”
He added that "this policy will not only lead to higher import prices, which will affect the poor more, especially if the imported goods are essential, such as medicine and food, but it will also lead to higher local prices, either because local industries rely on imported resources in the production process, or as a result of traders raising prices in line with the rise in prices of imported goods, so that poor families become the most affected ."
He pointed out the "impact on the creditor and the debtor: devaluing the national currency will affect both of them, as the impact varies depending on the type of currency used in the debt. If it is the national currency, the creditor is harmed, but if it is a foreign currency, the debtor is harmed. Thus, devaluing the local currency leads to an increase in the equivalent of foreign currencies in units of the local currency ."
He added: “The devaluation often drives national capital to flee abroad to avoid losing its value, in addition to increasing speculation, especially if individuals and economic units expect the devaluation to occur, which triggers a successive series of devaluations .”
Al-Marsoumi stressed that "the reduction may not achieve the desired goal, which is to improve the balance of payments, because exports and imports are not flexible enough to accept changes in relative prices, which is known as pessimistic elasticity ."
He explained that "the reduction will erode the cash balances in the national currency of citizens, whether hoarded or deposited in banks. Also, the rise in local prices as a result of the reduction will push wages and prices into a continuous spiral, which undermines the improvement in competitiveness ."
He explained: “Foreign investors, when converting their profits into their national currencies, will find that their profits decrease as a result of the host country’s exchange rate falling against the dollar, which limits the attraction of new investments. This situation may also weaken confidence in the country’s economy and negatively affect the process of attracting foreign investments .”
Al-Marsoumi stated that "the devaluation of the currency will negatively affect local industries that rely on imported materials and raw materials, as a result of increased production costs, which forces establishments to reduce the volume of production or raise prices, which reduces the demand for their products in light of stable nominal wages ."
He added: "The reduction will also lead to a higher external debt bill, and the allocation of more foreign exchange resources to service it if it is denominated in foreign currency, while the value of new loans denominated in local currency will decrease, which is the case in most developing countries ."
He pointed out that "the reduction will force public institutions slated for privatization to sell for less than their true value when assessed in foreign currencies, and will also raise real estate prices and construction costs due to the rise in construction material prices ."
Al-Marsoumi concluded by saying: “Devaluing the dinar against foreign currencies should not be the first line of defense, nor should it be a means to cover the financial deficit at the expense of vulnerable groups, as inflation leads to increased poverty, while enriching the rich, since inflation is a tax without legislation
Reconstruction and Development: It is likely that Maliki will endorse Sudani's nomination for Prime Minister in the coming hours.
Abdul Hadi Al-Saadawi, a member of the Reconstruction and Development Coalition, confirmed that the competition within the framework has become limited to Maliki and Al-Sudani, and that one of the two parties must concede to the other, suggesting that Maliki will, in the last hours, endorse Al-Sudani’s nomination for the premiership.
However, Al-Saadawi's interpretation is not unanimously accepted within the Shiite alliance, as it is countered by differing assessments that believe Al-Maliki remains a serious candidate and that he is handling the matter with strategic patience, drawing on his long political experience in crisis management and negotiating at the last minute—a tactic he has employed in previous stages of the political process.
Official government clarification regarding the imposition of customs duties
The Iraqi government spokesman, Bassem Al-Awadi, announced on Thursday that social media pages had promoted videos related to raising customs duties dating back to 2023, stressing that the government had not imposed any new tax .
Al-Awadi said in a statement to the official agency, which was followed by the “Al-Sa’a” network, that “pages on social media broadcast old footage dating back to 2023, talking about customs duties (protecting the national product) on consumer goods, after Iraqi producing companies submitted a request to protect their products that fully cover local markets with competitive specifications and prices, and to approve customs duties to protect the product, which is a procedure that all countries of the world apply as one of the national security measures to preserve and develop industry and open up job opportunities for the workforce .”
He explained that "the videos that were rebroadcast are old, and their originals are on official government platforms, and their previous dates can be verified ."
He stressed that “the government has not imposed any new tax, as confirmed today by the Customs Directorate,” noting that “the basis of the matter is the collection of tax deposits from border crossings and their transfer to the tax authorities through the ASYCUDA system, which has recently entered service, to be settled with traders and importers at the end of each year
Kurdistan's oil reserves are a strong pillar for Iraq's energy future.
Kamal Atroushi, the former Minister of Natural Resources in the Kurdistan Regional Government, announced that the oil and gas reserves in the Kurdistan Region are a fundamental and strategic factor for the future of energy in Iraq as a whole, and indicated that the lack of understanding with Baghdad has become the main obstacle to the oil and gas law.
In an interview with Kurdistan24, Atroushi stated that the oil and gas industry in the Kurdistan Region began in 2007 following the enactment of the Oil and Gas Law. He noted that the Kurdistan Region's hydrocarbon reserves, both oil and gas, are a key factor for the future of the energy sector in Iraq and Kurdistan.
Atroushi explained that prior to 2003, the Kurdistan Region was unable to take any steps in the oil industry due to political circumstances, but afterward, the region was given the free opportunity to explore its potential and manage its natural resources. He also emphasized that, relative to its geographical size, Kurdistan possesses rich and substantial reserves of oil and gas.
In another part of his speech, the former Minister of Natural Resources emphasized the role of international companies, saying: "In the field of production, we relied primarily on foreign companies, which operated according to their financial capabilities and advanced technology." He also explained that the ministry had made great efforts to develop a roadmap aimed at increasing the level of oil production.
Regarding the legal obstacles and the passage of the federal oil and gas law, Kamal Atroushi announced that the draft oil and gas law for the Kurdistan Region had been approved since 2007 and that there were many common points with the Iraqi proposal, but the problem was that the Iraqi federal government at the time did not give an opportunity for dialogue or to reach a deep understanding.
Kamal Atroushi also pointed out that the lack of a high-level committee at the Iraqi level to oversee energy activities remains one of the most significant obstacles. He added, "When the parties failed to reach an agreement on a comprehensive law, the Kurdistan Region was forced to enact its own oil and gas law."
Iraq contracts British firm to assess Kurdish oil production costs: SOMO
Iraq’s oil ministry has signed a key contract with a British consultancy to determine the production cost of Kurdish oil, a senior director from Baghdad’s national oil marketer told Rudaw on Wednesday, adding that the move is crucial to ensuring the uninterrupted continuation of Kurdish oil exports.
Ali Nizar, Director-General of the Iraqi Oil Marketing Company (SOMO), said the federal oil ministry “has signed a contract with the British consulting firm Wood Mackenzie, which will begin work in the near future to calculate the actual production costs at oil fields in the Kurdistan Region.”
In late September, Erbil, Baghdad, and international oil companies (IOCs) operating in the Region reached a tripartite agreement that paved the way for the resumption of oil exports through the Iraq-Turkey pipeline. Exports had been halted since March 2023, when a Paris-based arbitration court ruled in favor of Baghdad, concluding that Ankara violated a 1973 pipeline agreement by allowing Erbil to export oil independently beginning in 2014.
Under the September deal, an initial advance of $16 per barrel was set to cover extraction and transportation costs payable to the IOCs. The amount is temporary and will remain in place until an independent expert firm provides a more accurate cost assessment, with the agreement specifying that payments are to be made in the form of crude oil at prevailing market prices rather than in cash.
In late December, Nizar told Rudaw that the September agreement had been extended by an additional three months, pushing its expiry to the end of March 2026 from its original end-2025 deadline.
The senior SOMO official reiterated to Rudaw on Wednesday that “the tripartite agreement to resume guarantees continuity of the Kurdistan Region’s oil production and ensures that exports will not be halted again.”
Regarding efforts to expand the buyer base, Nizar noted the “strong demand” for Iraqi and Kurdish oil in Europe, adding that “all our efforts are focused on attracting buyers who offer the highest prices and face no legal obstacles.”
He noted nonetheless that Asian markets remain the largest buyers of Iraqi and Kurdish crude, stating that “78 percent of exports go to Asian markets, 12 percent to Europe, and the remaining volumes to US markets.”
Iraq currently produces about 4.2 million barrels per day, of which between 3.3 and 3.4 million barrels per day are exported, he added.
The Iraqi dinar falls as imports tighten
The Iraqi dinar has experienced a sharp decline in value against the US dollar in the parallel markets of Baghdad, Basra, and Erbil over the past three days, reaching its lowest point in months at 1,480 dinars to the dollar. This follows a prolonged period of stability around 1,420 dinars. The dinar's depreciation is expected to continue as a package of financial and trade measures is set to be implemented at the beginning of 2026. These measures include stricter import controls, activation of the customs automation system, and the imposition of tax levies on imported goods, in addition to cracking down on currency smuggling and inflated invoices. These developments have led to a shift of some dollar demand from official channels to the parallel market , creating temporary pressure on prices, while the official exchange rate remains fixed at 1,310 dinars to the dollar.
The financial advisor to the Iraqi government, Mazhar Muhammad Saleh, said that the recent rise in the dollar exchange rate in the parallel market is a temporary fluctuation resulting from the market's reaction to new financial measures, and does not reflect a structural imbalance in the Iraqi economy.
Saleh explained to Al-Araby Al-Jadeed that markets tend to test policies upon their launch, particularly the fiscal discipline package, which focused on controlling public spending, enhancing revenue efficiency, and expanding tax and customs revenue bases. He added that these measures have not yet impacted the daily standard of living, as the annual inflation rate has remained around 2.5%, supported by a stable official exchange rate, fiscal support amounting to approximately 13% of GDP, and trade policies that have helped absorb price shocks.
Economic expert Manar al-Ubaidi stated that the recent rise in the price of the dollar and goods in the Iraqi market is directly linked to the new import and customs procedures implemented by the government at the beginning of 2026. Al-Ubaidi explained to Al-Araby Al-Jadeed that activating the ASYCUDA system (an automated system for managing customs and facilitating trade), along with imposing tax deposits on imported goods upon entry, represent a fundamental shift in the mechanism for revenue collection and trade regulation, with the final tax settlement to be conducted at the end of the fiscal year.
Al-Ubaidi clarified that the current customs tariff is not a new government decision, but rather existing legislation passed by the Council of Representatives in 2010. He emphasized that any amendment to the law pertaining to it must be approved by the legislative authority, namely the Iraqi Council of Representatives. He added that stricter oversight has led to a decrease in currency smuggling and inflated invoices, which has driven some illicit demand for dollars into the parallel market. He noted that the rise in the dollar's value will be accompanied by increased prices for consumer goods and higher inflation rates, necessitating precise measures to increase non-oil revenues, while also protecting food, medicine, and transportation prices from any additional pressure on citizens.
Financial and banking expert Abdul Rahman Al-Sheikhli said that the recent turmoil in the exchange market is mainly due to a clear imbalance in the supply and demand equation for the dollar, as a result of the change in import behavior after the implementation of the ASYCUDA system at the beginning of 2026.
He explained that the pre-payment of customs duties prompted a number of traders to avoid official channels for foreign exchange and resort to importing through outlets that do not apply the same system, which led to a decline in the volume of dollars supplied through the Central Bank at the official rate.
Al-Shaykhli explained that this imbalance directly led to increased demand for dollars in the parallel market, coupled with decreased supply. This, in turn, put pressure on the exchange rate and prompted citizens to save dollars as a safe haven currency, rather than the local currency, the Iraqi dinar. He further explained that economic and political developments in some countries, including Venezuela, contributed to heightened anxiety in emerging markets, leading some traders to withdraw large amounts of dollars, which significantly increased pressure on the parallel market.
He stressed that the solution is not through temporary monetary measures, but rather through tightening control over import activity, restricting the entry of goods to official foreign transfers, and imposing higher customs duties on non-compliant importers, in order to achieve fairness among traders, restore balance to the market, reduce speculation, and enhance monetary stability.
Ministerial meeting to discuss economic issues
Deputy Prime Minister for Energy Affairs and Minister of Oil Hayyan Abdul-Ghani Al-Sawad received, on Thursday (January 8, 2026), Minister of Finance Taif Sami and Head of the Council of Advisors in the Council of Ministers Abdul-Karim Al-Faisal to discuss a number of economic files.
The ministry's media office stated in a statement received by "Baghdad Today" that "the meeting witnessed a meeting attended by the Undersecretary of the Ministry for Distribution Affairs, the Undersecretary of the Ministry for Extraction Affairs, and a number of the general managers of the ministry's companies and departments."
The statement added that "economic and financial issues were discussed during the meeting."
What does fixing the dollar exchange rate at 1300 in the 2026 budget mean? And does the Central Bank have a plan to control exchange rate fluctuations? A Sudanese advisor explains.
As the Iraqi government seeks to consolidate economic stability and enhance confidence in fiscal and monetary policies, exchange rate decisions stand out as one of the most important indicators affecting the state budget and the course of the macroeconomy.
As the 2026 budget is being prepared, attention is turning to the directions of the Central Bank and the government in managing the value of the Iraqi dinar, especially in light of the challenges of inflation, financing public spending, and maintaining foreign reserves.
Regarding the stabilization of the dollar exchange rate , the Central Bank addressed the Budget Department at the Ministry of Finance concerning the draft Federal General Budget Law for the Republic of Iraq for the year 2026.
The Central Bank stated that “the official exchange rate that will be adopted in 2026 is (1300) dinars per dollar, which has been in effect since February 2023.”
Sources revealed that “the Central Bank will buy dollars at a price of 1300 dinars from the Ministry of Finance and sell them at a price of 1310 dinars to banks, which will sell them at 1320 dinars to traders and foreign transfers.”
Regarding the impact of the peg
, and commenting on this address, the Prime Minister’s Advisor for Economic and Financial Affairs, Mazhar Muhammad Salih, revealed the dimensions and effects of the Central Bank of Iraq’s decision to peg the official exchange rate at 1300 dinars to the US dollar within the 2026 budget project, stressing that the decision comes within the framework of a well-thought-out economic vision aimed at enhancing the overall stability of the national economy.
Saleh told Iraq Observer that fixing the exchange rate at this level reflects a calculated coordination between fiscal and monetary policies, and is a step towards raising the real value of the Iraqi dinar in a limited way, in line with the reality of economic indicators and the available capacity of monetary policy.
He explained that the decision represents a positive message to local and international markets, as it is based on the strength of the central bank’s foreign reserves and its ability to manage monetary stability with high confidence, without resorting to exceptional tools that may disrupt the economic balance.
Saleh pointed out that the government’s fiscal policy is moving towards maximizing real revenues and diversifying their sources, away from what is known as “monetary adjustment,” which relies on the exchange rate as an indirect means of financing the budget, stressing that this shift promotes reliance on authentic and more sustainable financial instruments in controlling spending and mobilizing resources.
The advisor stressed that fixing the exchange rate sends a clear signal of the priority of containing inflation and maintaining economic stability, while emphasizing the independence of monetary policy and pushing fiscal policy towards greater efficiency and discipline, in order to achieve a sustainable balance in the Iraqi economy and protect the purchasing power of citizens in the medium and long term.
Ultimately, the decision to fix the official exchange rate reflects an economic vision aimed at achieving a calculated balance between the requirements of monetary stability and the objectives of fiscal policy, thereby ensuring sustainable growth and protecting the purchasing power of citizens.
US Chargé d'Affaires: The United States emphasizes the need for immediate action to dismantle "militias" in Iraq
The US Embassy in Baghdad stated that the United States will continue to clearly emphasize the need for immediate action to dismantle militias in Iraq.
In a post on its X platform, the embassy said that Chargé d'Affaires Joshua Harris met with Ammar al-Hakim, leader of the Hikma Movement, to discuss shared interests in protecting Iraqi sovereignty, defeating terrorism, enhancing regional security, and strengthening economic ties that benefit both Americans and Iraqis.
Harris reiterated that "the inclusion of Iranian-backed terrorist militias in the Iraqi government, in any capacity, is incompatible with a strong US-Iraqi partnership."
He added that "the United States will continue to clearly emphasize the need for immediate action to dismantle terrorist militias that serve foreign agendas and threaten Iraq's sovereignty, stability, and economy."
Mr. Khamenei: Iranians must maintain their unity, and Trump will fall spectacularly.
The Supreme Leader of the Islamic Republic, Mr. Ali Khamenei, affirmed: Everyone knows that Iran will not back down an inch from its principles, and he urged all Iranians to unite their ranks.
In his Friday sermon, which was broadcast by the news agency Video, Mr. Khamenei said, "There are rioters who want to please the American president by vandalizing public property in their country," emphasizing that "this man who claims to be the father of the Iranian people will fall spectacularly," and urging the American president to focus on his own country's problems.
Mr. Khamenei added, "Iran will not tolerate foreign agents, and everyone should know that the Islamic Republic will not give in to saboteurs and will not tolerate agents."
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These articles are for THU JAN 8 2026
State banks
According to the latest estimates for 2025, the total number of banks operating in the country is about 83. Most non-governmental banks have succeeded in attracting customers from various social segments, including government employees who have deposited their salaries in commercial banks, in exchange for the services they provide, starting from modern buildings and amenities for visitors and the ease of administrative procedures, up to the low deduction rate compared to governmental banks.
It is certain that private banking institutions have not abandoned their profit goals, which they studied in advance, making government banks institutions that are undesirable to deal with except out of necessity, due to the old administrative bureaucracy that still overshadows dealing with the customer, and they have kept their banking interest rates higher than private sector banks, to the point that they have become suffering from a lack of financial liquidity due to hoarding money in homes instead of banks.
A large percentage of state employees have their salaries deposited in private banks instead of government banks, because they deduct a lower percentage than the government bank's percentage for salary payments. As for financial advances, the interest rate is double. While the interest rate on advances is 8% and loans are 6% with a decreasing installment in the government bank, the interest rate in some banks is 5.5% for loans and advances. As for the granting commission, it is 2.5% and 2% is the early repayment commission. These financial advantages have created a great desire among employees, earners and businessmen to deal with private banks and prefer them over government banks, which requires them to benefit from the experience of international banks in dealing with customers and attracting them.
We are not here to criticize government banks or to belittle some of the services they provide to the people, or to belittle their employees, but rather we are concerned that Iraqi state banks should be of the highest standing and prestige in administrative and financial dealings.
The first step that rises to the level of dealing is the customer’s confidence in the bank’s ability to protect his money under all kinds of circumstances, and this matter requires a strict law called “deposit protection”.
It is not right that investors, businessmen, company owners, and citizens who provide sustainable financial liquidity to the bank should face difficulty in obtaining some of their money deposited with the bank, or that the depositor may not receive his money on specific days.
Revising and updating some economic laws within a methodology that allows citizens to access state banks with complete and uncompromised confidence has become an urgent necessity, because the soundness and immunity of state economic institutions are built on the quality of dealings, ease of procedures, and enhancing the confidence of citizens and investors in government banking institutions.
Qaani makes a "lightning" visit to Baghdad
Informed Iraqi political sources revealed on Thursday a "lightning" visit by the commander of the Quds Force in the Iranian Revolutionary Guard to the Iraqi capital, Baghdad.
Sources told Shafaq News Agency that “the commander of the Quds Force in the Iranian Revolutionary Guard, Major General Ismail Qaani, made a quick, unannounced visit to the capital, Baghdad, during the past 48 hours, which lasted for a few hours, during which he met with a number of leaders of armed factions.”
She explained that "the main part of Qaani's visit was about the issue of the factions' weapons and their organization, within the framework of efforts aimed at containing any potential disagreements between those factions regarding the mechanisms for dealing with this issue, and ensuring that it does not turn into a source of internal tension or conflict between the concerned parties."
The sources confirmed that “Qani’s meeting with the faction leaders emphasized the unity of position and the prevention of any internal differences or escalation, while stressing the importance of addressing the issue within coordinated frameworks that ensure security stability and avoid negative repercussions on the general situation in Iraq.”
The issue of restricting weapons to the state tops the political and security debate in Iraq, especially with the escalation of messages from Washington linking stability and bilateral relations to ending the phenomenon of weapons outside official institutions, or integrating armed formations within the regular frameworks with clear state controls.
In this context, at the end of December 2025, initial indications emerged from some forces associated with the factions towards adopting the principle of exclusivity, including the Sadiqun Movement as the political front of Asaib Ahl al-Haq, before the tone quickly changed with the intensification of the debate within the “axis of resistance” regarding the meaning of exclusivity, its limits, and its relationship to the foreign presence.
In contrast, prominent factions respond that the root of the problem is the foreign military presence, and they place any discussion about their weapons within the condition of full sovereignty and the withdrawal of foreign forces. This was confirmed by a statement issued by what is known as the “Iraqi Resistance Coordination” on Sunday evening, January 4, 2026, representing six factions, as it described its weapons as “sacred” and refused to discuss withdrawing them before what it calls the end of the “occupation” in all its forms.
However, the statement itself opened the door to internal disputes, after information leaked about objections to some of its contents and wording, leading to Asaib Ahl al-Haq declaring that the statement did not represent them, in an indication of differences within the armed scene.
Overall, Ismail Qaani is seen as one of the most prominent links between Tehran and its Iraqi allies, not only at the level of armed factions but also within the political forces close to Iran, especially in moments of internal division or increased risks of escalation with Washington.
Widespread fears on the Iraqi street... Iraq is facing a financial shortage, economic hardship, and rising prices for basic commodities.
Iraq stands at a critical economic crossroads, with mounting indications of a government plan to raise taxes and fees on citizens. Unofficial leaks suggest an increase in the dollar exchange rate and the imposition of taxes on medicine, fuel, mobile phone recharge cards, and other essential goods and services.
In the absence of an official government statement confirming or denying these reports, citizens live in a state of constant anxiety and anticipation, fearing they will bear the brunt of the financial crisis.
Experts believe this is part of a policy of testing public opinion, a tactic governments employ with controversial decisions to gauge public reaction before proceeding or reversing them.
Political analyst Ayed al-Hilali warned that imposing new taxes in the coming period could present the Iraqi government with complex popular and economic challenges if it is not accompanied by genuine reforms addressing the state's structure and sources of financial waste.
Al-Hilali told Iraq Observer that “Iraq is not under an economic blockade and is still able to export oil, even if at times at a loss.” He pointed out that “the current concern is the attempt to blame citizens for failures by increasing taxes and fees.”
He explained that “the government is aware of the danger of overburdening citizens economically, given the low income levels, as any significant pressure could lead to demonstrations and political problems that it can ill afford.” He predicted that “the potential taxes will be indirect.”
He noted “the enormous waste of public funds, such as the Ministry of Electricity, which spends billions of dollars annually without any real returns, while private generators earn about $10 billion annually from citizens.” He added that “the value of domestic oil exceeds $35 billion, yet the state does not benefit from it as it should.”
He clarified that “the real crisis is not in imposing taxes, but in the absence of a state of institutions and the widening gap between a political class living in a different world and the citizen who bears the burdens alone.”
With every crisis the country goes through, the Iraqi citizen remains the party that bears its direct consequences, as the past years have not been free of burdens, starting with waves of terrorism, passing through the Corona pandemic and the accompanying economic decline, and reaching the rise in the dollar exchange rate that has burdened Iraqi families.
We are in shock, and imports are going to other countries"... The
repercussions of raising customs duties and the dollar are under the microscope of specialists.
Economic researcher Safwan Qusay predicted on Wednesday, January 7, 2026, that Iraq would suffer significant losses due to the restrictions imposed on the automotive sector. He also pointed out that some imports are destined for other countries and do not benefit Iraqis, adding that the rising exchange rate of the dollar has weakened Iraqis' confidence in the financial system. Meanwhile, economist Manar al-Ubaidi described the caretaker government's increase in customs tariffs as a "shock," stating that preliminary steps should have been taken first.
In detail, Qusay said in a television interview followed by “Al-Jabal” that “ the rise in the dollar exchange rate has weakened the confidence of Iraqis in the financial system,” noting that “the application of ASYCUDA will reduce the gap between remittances and credits.”
He added, " We need an international company to regulate trade for Iraq," noting that "the ASYCUDA system includes dozens of major countries."
He pointed out that " K2 Company seeks to reduce gaps and close loopholes in the Iraqi economy ," saying: " We will incur significant losses after the restrictions imposed on the automotive sector."
He said: "Some import operations do not concern Iraqis. They go to other countries," adding, " The country's needs should be determined for all import categories, as there is an exaggeration in many of them."
He argued that "employees should not be burdened with the drop in oil prices ," explaining that " most employees want to save money but they buy dollars."
He continued, "It is important to adjust customs tariffs, but where are the real reforms?", noting that "part of the Ministry of Finance's assets should be transferred to sovereign wealth funds."
Qusay ruled out a drop in oil prices, explaining that this was due to "billions invested by global companies."
In contrast, economist Manar Al-Obaidi, who was present at the same dialogue, said that “the customs tariff was approved in 2010, but its implementation has only just begun,” explaining that “Iraq purchased the ASYCUDA system in 2014 and it was supposed to be operational since then, but the system only started operating in 2022.”
He pointed out that "preliminary steps should have been taken regarding the implementation of customs," noting that "the customs tariff is now being used to increase non-oil revenues in the country."
He explained that "the customs tariff was almost zero percent, but now there has been a shock ," adding that " the Iraqi economy is governed mainly by news and rumors."
He pointed out that "Iraq's total revenues for 2025 were $104 billion," noting that "the volume of expenditures is constantly increasing, and the government is seeking to increase non-oil revenues."
The economist said, "Public transport investment projects should have been established before imposing customs duties on cars."
He pointed out that "some sections of the customs tariff, such as electrical appliances and others, should be reviewed."
Al-Obeidi explained that "Washington has no problem with open trade with Iran."
He believed that "having confidence in the banking sector will put the government at ease and allow it to borrow more," noting that "deposits deposited in banks are guaranteed by a specialized company."
Economic expert Manar Al-Obaidi:
Monetary policy to maintain the inflation rate
The Central Bank of Iraq confirmed its adoption of a monetary policy aimed at maintaining inflation rates and the general level. For prices.
Alaa al-Fahd, a member of the bank's media team, told Al-Sabah newspaper: "The Central Bank adopts a balanced monetary policy to maintain inflation rates, and has succeeded in recent years in achieving price stability and controlling the money supply in line with market needs and the size of foreign currency reserves." Al-Fahd added that the main objective of this policy is to maintain the general price level within normal limits, while ensuring the continued purchasing power of citizens.
For his part, economist Dr. Mahmoud Dagher said that inflation rates in the country are low, and maintaining them is partly due to monetary policy measures, as well as the large amount of support provided by the government to subsidize the prices of basic foodstuffs, fuel, and electricity.And water.
Dagher added to Al-Sabah that countries are keen to keep the inflation rate at a level close to or around 2 percent, but in Iraq it is less than that.
Parliament opens the file on non-oil revenues
With mounting pressure on the public budget and a growing need for long-term economic stability, Iraq is entering a pivotal phase in managing its financial resources. All eyes are on the parliamentary session next Saturday to discuss non-oil revenues. This step comes at a time when policymakers are increasingly aware of the importance of reducing overall dependence on oil and strengthening alternative sources of funding that support public services and protect purchasing power. For the citizens.
MP Dr. Ali Saber Al-Kinani told Al-Sabah: “Opening the file on non-oil revenues is a national necessity,” noting that focusing on these revenues contributes to reducing dependence on oil, which alleviates pressure on monetary policy and strengthens purchasing power. For the citizens.
He added that the parliamentary debate will provide an opportunity to evaluate the performance of the relevant authorities, improve collection mechanisms, and expand the revenue base from various sources. Diverse.
In this context, MP Alaa Al-Haidari pointed out that boosting non-oil revenues is an important step to address financial imbalances in the general budget, support productive sectors, revitalize industry and agriculture, as well as improve the investment environment and create additional job opportunities, which contributes to strengthening economic and social stability.
As part of the government's efforts to increase non-oil revenues, Mazhar Muhammad Salih, the Prime Minister's advisor on financial affairs, explained that the government program to maximize non-oil revenues contributed to a significant increase in their share last year, as a result of adopting digital governance in the tax and customs sectors. Salih told Al-Sabah newspaper that non-oil revenues rose to approximately 12% of the total 2025 budget, compared to about 7% in previous years. This reflects the government's efforts to improve tax and customs collection and achieve greater financial stability, moving away from total dependence on oil.
Saleh added that this improvement includes multiple categories of revenues, most notably commodity taxes, public sector profits, and customs duties, stressing that the government seeks to raise the percentage of non-oil revenues to about (20%) of the total general budget in the coming years by diversifying sources, improving collection mechanisms, and combating financial evasion.
UN assessment: Iraq today is unrecognizable compared to years ago
The UN coordinator in Iraq, Ghulam Ishaq Zai, gave an optimistic assessment of the situation in the country, stressing that Iraq has strengthened confidence in its institutions and is moving steadily towards stability, while noting that the country has become "remarkable and unrecognizable" compared to what it was years ago.
The United Nations website, in a report seen by Shafaq News Agency, stated that Isaac Ze spoke about the transition from the United Nations Assistance Mission for Iraq (UNAMI), whose mandate officially ended last December, to a new partnership with the Iraqi authorities focused on development.
The report quoted the UN envoy as saying that "Iraq today is unrecognizable and wonderful, especially for those who lived through the turbulent early years of the transition," noting that a country devastated by war after the 2003 invasion has now succeeded in building confidence in its institutions and is moving towards greater stability.
Ishaq Zee explained that poverty rates in Iraq have decreased from 20% in 2018 to 17.5% during the period 2024-2025, noting that preliminary reports indicate that Iraq now occupies an advanced position in the Human Development Index, which measures life expectancy, education levels and living standards.
The report indicated that the improved security environment helped about 5 million internally displaced people return to their areas, while those who remained in the camps were mostly due to housing or civil identity issues.
The UN envoy also touched on what he described as an "important milestone," namely the parliamentary elections held last year, in which the participation rate reached 56%, an increase of 12% over the previous elections, with a wide participation of women who constituted about a third of the candidates.
According to the report, the UNAMI mission was established in 2003 to assist Iraq in its transitional phase after the fall of Saddam Hussein’s regime. It went through difficult phases that culminated with the control of large areas of the country by ISIS before its defeat at the end of 2017. The mission ended its work on December 31, 2025, while the United Nations will continue its activities in Iraq under the leadership of Isaac Ze.
The report noted that the new phase of cooperation is based on a five-year development agreement, signed with the Iraqi government on December 25, which constitutes a roadmap to support national priorities, including education, health, economic growth, environmental protection and good governance.
The report also quoted Isaac Zee as saying that the current goal of the United Nations is "to support the social and economic needs of Iraq and to build on what has been achieved over the past two decades," noting that Iraq will contribute to financing the implementation of these programs, in an indication of the development of the partnership and the government's shift from the role of aid recipient to partner and supporter.
The report concluded by noting that the United Nations team in Iraq currently includes 26 agencies, funds and programs of the international organization.
Where is the intelligence?
Who are the 15 ghosts? They control the dollar and the markets and plunder 10 trillion dollars annually.
Every time a government official stands before the camera to speak of “relative stability” in the exchange rate, the unspoken question looms larger than all the figures: If financial experts and monetary authorities acknowledge that the parallel dollar market in Iraq practically revolves around a narrow circle of players, no more than 10 to 15 individuals or financial fronts, why can’t the state, with all its security, intelligence, and regulatory apparatus, monitor and dismantle this circle, or at least expose it to the public? Are we truly dealing with “ghosts,” or with a complex web of interests involving banks, political parties, exchange companies, and major traders, all sharing profit margins estimated at billions of dollars at the expense of the average citizen?
This question is becoming increasingly urgent given the repeated warnings about the widening gap between the official exchange rate of 1,310 dinars to the dollar and the parallel market rate, which has been fluctuating for months between 1,500 and 1,480 dinars – a difference of nearly 15%. This gap isn't just reflected in currency exchange rates; it's also reflected in the cost of food, medical bills, and rent. Economist Rashid al-Saadi warns that "the uncontrolled rise in the dollar exchange rate on the parallel market directly threatens economic and social stability by driving up inflation, reducing purchasing power, disrupting markets, and increasing the prices of goods and services, especially imported ones."
From the platform to the “dollar oligarchy”
When the Central Bank of Iraq launched its electronic money transfer platform in early 2023, the stated goal was to regulate foreign dollar transfers and shift oversight from post-implementation to pre-implementation, responding to pressure from the US Federal Reserve after discovering that a significant portion of transfers were untraceable and went to high-risk destinations. The platform, ostensibly a regulatory tool, in practice revealed a highly concentrated market structure.
In just ten months, the Central Bank sold approximately $55 billion through its platform, with projections indicating that the year would end with nearly $75 billion in hard currency sales. At the heart of these figures lies a striking fact: out of dozens of banks operating in Iraq, the actual capacity to transfer dollars abroad has gradually been concentrated in just six banks. These six alone possess correspondent banking networks and relationships with international banks, and, according to bank officials, control approximately 95% of official dollar transactions.
Thus, in less than two years, the nucleus of what can be called the “dollar oligarchy” was formed: a limited number of banks, some private and some governmental, stand at the intersection between the state and the global financial system, controlling who enters the dollar circle and who is excluded, at a time when 31 Iraqi banks were placed on the American blacklist and prevented from dealing in dollars, pending complex technical and legal reviews.
In addition, new channels were opened for transfers in other currencies (euro, yuan, rupee, dirham) with countries that account for approximately 70% of Iraq's foreign trade. However, the primary channel remained the US dollar, whether through the platform or later via correspondent banks. By the end of 2024, the majority of transfers had shifted from the platform to a direct transfer system through correspondent banks with an international auditing firm. Then, in early 2025, the electronic platform was officially shut down, a move presented as a "return to normal operations," in line with the rest of the world.
However, this transition did not dismantle the market's concentration, but rather added a new layer of ambiguity to it. The same banks that dominated the platform era remained in a position of power after its cancellation, while a wider segment of exchange companies returned to dealing in dollars under different "regulatory" titles, and the basic power structure remained the same: a limited number of gateways holding the keys to the dollar, in a country whose economy depends on imports to the point of suffocation.
The 180 dinar gap: a gain for a few and a loss for millions.
Talking about a “gap” between the official and parallel prices seems at first glance to be a technical issue; a few dozen dinars up and down, but translating this gap into total figures reveals the depth of the problem.
If we take just one example from the 2025 data: the Central Bank sold approximately $60.781 billion over nine months. Assuming that the difference between the official platform rate (1300 dinars) and the average selling price in the parallel market (1480 dinars) is 180 dinars per dollar, the theoretical profit resulting from this difference amounts to approximately 10.94 trillion Iraqi dinars, equivalent to more than $8 billion based on a rate of 1300 dinars per dollar.
Even if the difference were reduced to just 20 dinars per dollar, the result would still be huge: more than 1.2 trillion dinars, or about one billion dollars, going in one year into the pockets of those who can access the official dollar and recycle it in the parallel market.
These figures don't suggest that a single entity captured the entire difference, but they do reveal the size of the "pie" distributed among a network stretching from certain banks to large exchange companies, importers, speculators, and smugglers. In this context, talk of 10 or 15 individuals or financial fronts controlling the market isn't journalistic exaggeration, but rather an accurate description of the concentration of power in a very limited number of key sectors within the financial system.
Economic warnings... and the state's limited response
In contrast to this picture, official discourse attempts to reassure the public that the difference between the two official exchange rates is “insignificant” in terms of price levels, that inflation remains around 3.7%, and that basic commodities are financed with the official dollar, according to government advisors. However, Al-Saadi’s analysis takes a different direction; he believes that the uncontrolled rise in the parallel market is immediately reflected in the daily consumption basket, from food to rent and services, disrupting the business environment and weakening investor confidence in the national economy. This is because the continued gap effectively means the continuation of speculation and smuggling, and reinforces the conviction among economic actors that the exchange rate decision is no longer solely in the hands of the state.
Al-Saadi also points to a crucial issue: the persistent gap reflects a clear flaw in monetary and regulatory policies, revealing that state tools—from controlling border crossings to monitoring exchange companies and providing foreign currency in an organized and equitable manner—are not being used effectively or at all. With the absence of what he calls “quick and urgent solutions,” the situation becomes more complex, and the cost of waiting increases for both citizens and the business sector.
Why don't state agencies get to the heart of the game?
When central bank officials are asked about the reasons for the exchange rate volatility, the discourse often focuses on three factors: illicit trade, small-scale speculators, and demand from neighboring countries lacking access to dollars. This description may explain part of the picture, but it ignores the deeper structure that has emerged in recent years.
A state that possesses detailed data on every bank transfer, complete lists of sanctioned and licensed banks, records of exchange companies, and security and intelligence agencies that extend from border crossings to internal markets, yet it is unable to provide a transparent account to the public about the identity of those who actually control the joints of the exchange market.
The logical possibilities do not exceed three overlapping scenarios:
First, the real players do not appear under their own names, but rather operate through fronts: exchange companies registered in the names of ordinary individuals, or boards of directors of private banks that are linked behind the scenes to influential political or commercial figures, or networks of agents in multiple cities and governorates, which makes tracking the real decision more complicated than simply closing a shop or imposing a fine.
Second, part of these networks is politically protected, because the price difference does not represent just commercial profit, but a continuous source of funding for parties, movements and pressure groups, which benefit from the daily difference between the two prices to finance their political, media and social activities, in exchange for providing cover for the intermediary links in banks and exchange companies.
Third, the state itself sometimes uses the exchange rate as a management tool, turning a blind eye to limited increases or short waves of fluctuation to absorb a budget deficit, or to finance internal obligations, or to pass painful economic decisions under the pressure of reality, before returning to talk about “treatments” and “packages of measures” to limit the parallel market.
In all these scenarios, the question of the state’s “deficit” becomes less realistic than another question: To what extent does the state really want to enter into a comprehensive confrontation with a network of interests that benefits from the instability of the exchange rate, at a time when it needs this network politically or financially?
The return of exchange bureaus to the dollar: Has the battle ended, or has its form changed?
With the electronic platform shutting down in early 2025 and a wider range of exchange companies returning to dollar transactions under new regulations, the situation appeared to be a transition from an “emergency system” to “normalcy.” However, reintegrating exchange companies into the dollar market, after a large portion of them had been barred from it under the pretext of combating smuggling and money laundering, effectively means recycling the same players, or a significant portion of them, within modified rules of the game, rather than a fundamental change in the market structure.
The Central Bank is betting that prior oversight through correspondent banks and international auditing firms will close the loopholes exposed by the platform's years of operation, and that stricter adherence to international compliance standards will curtail the ability of outdated networks to function. However, the Iraqi experience suggests that any regulatory system—no matter how robust it appears on paper—can become an additional layer of bureaucracy, sometimes used to redistribute opportunities among major players rather than dismantle their monopolies, if it is not accompanied by a clear political will to expose the true beneficiaries of the parallel market.
From the desired to the possible: What can actually be done?
When Rashid Al-Saadi calls for “an integrated package of solutions that includes effective coordination between monetary and fiscal policy, activation of control tools, and transparent procedures that ensure the stability of the exchange rate and reduce speculation,” he sets a logical general framework, but he runs into the question of implementation: Does the structure of the political economy in Iraq allow for going to this level of transparency?
A realistic solution does not begin simply with increasing the supply of dollars at auction or tightening penalties on small money changers, but with more radical steps, including:
Detailed data – even minimal – on the structure of the currency market is crucial: the market share of each bank, each major exchange company, concentration ratios, and the main transfer destinations.
The exchange rate issue must be integrated with the issue of party financing and election spending, as these two tracks converge at a single point: who pays the price and who profits from the difference.
Banking reform must be linked to social policies that rebuild trust between citizens and the state, because any talk of exchange rate stability loses its meaning when people see that the cost of this stability is borne by their purchasing power and their children's future.
Until that happens, the situation will remain largely unchanged: official data speaks of “relative stability” and “acceptable” inflation, while experts warn of the widening gap between the official and official rates and its impact on daily life, and a parallel market operates around a small circle of players, said to number between ten and fifteen, but whose names remain undisclosed. The underlying question is: has the state truly failed to pursue this circle, or would fully exposing it open up files far larger than the existing power structure can handle?
Financial measures and the threat to the Iraqi market: The Iraqi dinar under pressure from the dollar.
The Iraqi dinar is witnessing a significant decline against the dollar in the parallel markets in Baghdad, Basra and Erbil, at a time when the government has begun implementing a package of financial measures and tightening control over imports and customs.
The parallel Iraqi markets in Baghdad, Basra and Erbil recorded a sharp decline in the value of the Iraqi dinar against the US dollar during the past three days, as the dinar recorded its lowest value in months at 1480 Iraqi dinars against one dollar, after a long period of stability at the threshold of 1420 dinars.
Amid expectations that the value of the dinar will continue to falter with the implementation of a package of financial and trade measures at the beginning of 2026, which included tightening control over imports, activating the customs automation system, imposing tax guarantees on imported goods, in addition to narrowing the paths of currency smuggling and inflating invoices.
These developments led to a shift of some of the demand for dollars from official channels to the parallel market, which created temporary pressure on prices, while the official exchange rate remained fixed at 1310 dinars per dollar.
The financial advisor to the Iraqi government, Mazhar Muhammad Saleh, said that the recent rise in the dollar exchange rate in the parallel market is a temporary fluctuation resulting from the market's reaction to new financial measures, and does not reflect a structural imbalance in the Iraqi economy.
Policy testing
Saleh explained that markets tend to test policies when they are launched, especially the fiscal discipline package that focused on controlling public spending, enhancing revenue efficiency, and expanding tax and customs bases.
He added that these moves did not affect the daily standard of living, as the annual inflation rate remained around 2.5%, supported by the stability of the official exchange rate, financial support amounting to about 13% of GDP, in addition to trade policies that helped absorb price shocks.
Economic expert Manar Al-Obaidi revealed that the recent rise in the prices of the dollar and goods in the Iraqi market is directly related to the new procedures that the government began implementing at the beginning of 2026 in the import and customs file.
Al-Obaidi explained that activating the ASYCUDA system (an automated system for managing customs and facilitating trade), along with imposing tax guarantees on imported goods upon entry, represent a fundamental shift in the mechanism for collecting revenues and regulating trade, with the final tax settlement to take place at the end of the fiscal year.
Al-Ubaidi explained that the customs tariff in place is not a new government decision, but rather an existing law approved by the House of Representatives in 2010, and that any amendment to the law related to it must go through the gateway of the legislative authority represented by the Iraqi House of Representatives.
Decline in currency smuggling
He added that tightening controls has led to a decline in currency smuggling and inflated invoices, which has pushed some of the illicit demand for dollars into the parallel market. He pointed out that the rise in the dollar will be accompanied by an increase in consumer goods prices and higher inflation rates, which calls for careful measures to increase non-oil revenues, while also protecting food, medicine and transportation prices from any additional pressure on citizens.
Financial and banking expert Abdul Rahman Al-Sheikhli said that the recent turmoil in the exchange market is mainly due to a clear imbalance in the supply and demand equation for the dollar, as a result of the change in import behavior after the implementation of the ASYCUDA system at the beginning of 2026.
He explained that the pre-payment of customs duties prompted a number of traders to avoid official channels for foreign exchange and resort to importing through outlets that do not apply the same system, which led to a decline in the volume of dollars supplied through the Central Bank at the official rate.
Demand for the dollar
Al-Sheikhli explained that this imbalance was directly reflected in the increased demand for the dollar in the parallel market compared to the decrease in supply, which generated pressure on the exchange rate and prompted citizens to save dollars as it is the safer means instead of the local currency, the Iraqi dinar.
He explained that economic and political developments in some countries, including Venezuela, have contributed to raising levels of anxiety in emerging markets, and have prompted a segment of traders to withdraw large amounts of dollars, which has greatly increased pressure on the parallel market.
He stressed that the solution is not through temporary monetary measures, but rather through tightening control over import movement, restricting the entry of goods to official foreign transfers, and imposing higher customs burdens on non-compliant importers, in order to achieve fairness among traders, restore balance to the market, reduce speculation, and enhance monetary stability
An economic assessment of the Central Bank's decision to fix the dollar exchange rate in the 2026 budget.
Al-Marsoumi told Al-Furat News Agency that: “The Central Bank has always sought to stabilize the dinar against foreign currencies,” considering that “any change in the official exchange rate could lead to widespread negative consequences at the financial and social levels.”
He explained that "reducing the exchange rate of the dinar is not a quick solution to the problems of the economy," noting that "any decrease in the currency must be preceded by comprehensive reform steps that include financial, tax, customs, trade and investment policies."
He added, "The financial benefits of lowering the exchange rate are limited compared to the significant social and economic impacts that may result from this step."
The economist explained that "the Central Bank's decision reflects the desire to maintain stability; however, it faces challenges due to the large gap between the official price and the parallel market, which is exacerbated by the application of the Skoda system to all goods imported into Iraq."
He stressed that "it would have been better to implement the system gradually on a specific set of goods while working to resolve coordination issues with the Kurdistan Region to mitigate the impact of the measures on traders and markets."
Al-Marsoumi concluded by saying that "stabilizing the exchange rate is a positive signal for investors and citizens, but it requires parallel steps to ensure reducing the price gap and achieving actual monetary stability in local markets."
The Central Bank of Iraq addressed the Ministry of Finance on Wednesday, confirming that the official exchange rate adopted in the 2026 budget will be 1,300 dinars per dollar.
Video | Between 1300 dinars and the parallel market... Will the price battle be decided?
"Vegetables are going to rise, meat is going to rise, and the citizen—who's going to live? They say he's been given a salary that covers the dollar difference, but his salary has become less than the dollar—between 1300 dinars and the parallel [market rate]. Will the battle over the price be decided? The number has dropped, but the question hasn't been settled yet.1300 dinars per dollar is the official price included in the 2026 budget, confirmed by the Central Bank of Iraq in an official document. But on the other hand, the dollar is trading today at over 148,000 dinars in the Baghdad and Erbil exchanges—a huge gap that raises the question: Is the new pricing enough to lower the price in the market?The official path has become clear: The Central Bank buys dollars from the Ministry of Finance at 1300 dinars, sells them to the banks at 1310, so the banks sell them to the trader and for external transfers at 1320 dinars—a complete, calculated chain and path.But the parallel market doesn't move by numbers alone; it moves by demand, timing, and confidence—and that's where the crisis lies. Fixing the official price doesn't necessarily mean it will actually drop in the market, because supply and demand forces ultimately control it.In the end, the decision has been made, the path is set, and the coming days are the ones that will answer: Will the fixing succeed in breaking the dollar gap?"
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