MP Mahmoud al-Shammari has warned that Iraq could face a significant financial challenge if current economic conditions persist, pointing to declining foreign currency reserves and continued dependence on oil revenues.
Al-Shammari stated that the reduction in foreign reserves could have serious economic consequences, arguing that the absence of substantial economic reforms may increase pressure on public finances in the coming years. He emphasized that Iraq’s heavy reliance on oil revenue leaves the economy exposed to fluctuations in global oil prices and energy markets.
He called for broader economic diversification, urging the government to strengthen non-oil sources of income, support productive sectors, attract investment, and implement reforms aimed at creating more sustainable state revenues.
His comments come after reports that Iraq’s foreign currency reserves declined from approximately $109 billion to $77.5 billion, a decrease of about $31.5 billion, or nearly 29%. According to statements attributed to Central Bank Governor Nizar Nasser, a large portion of the funds was used to finance government expenditures, including public-sector salaries.
If the reported figures are accurate, Iraq’s reserves would still remain at a level considered substantial by regional standards, but the decline highlights the ongoing pressure created by high government spending and the country’s dependence on oil income. Economists generally view economic diversification, private-sector growth, and investment expansion as key measures for reducing vulnerability to future oil-price shocks and strengthening long-term financial stability.
