Former member of the Parliamentary Finance Committee, Abdul Hadi Mouhan, said the new Iraqi government is facing two difficult financial choices as it tries to secure funding for state expenses under the current economic conditions.
Mouhan explained that the government led by Ali Al-Zidi may either turn to external borrowing or consider raising the exchange rate of the Iraqi dinar to increase revenues.
He warned that external borrowing would be the more dangerous option because it could place heavy financial pressure on Iraq in the future and increase the country’s debt burden.
According to Mouhan, the second option — adjusting the exchange rate — is considered less risky compared to foreign borrowing, even though it could still affect citizens through higher prices and inflation.
He believes the government is more likely to move toward raising the exchange rate in the upcoming budget as a way to deal with inflation, reduce the federal budget deficit, and prevent further economic instability.
