Iraq is facing a serious financial problem after oil exports dropped and the Strait of Hormuz crisis added more pressure on the economy. Prime Minister’s financial advisor, Mazhar Muhammad Salih, said the country is now losing nearly $9.5 billion every month because of lower oil revenues.
To deal with the crisis, the Ministry of Finance is preparing an emergency plan built on three main steps. The first is borrowing money inside Iraq and from abroad. The second is increasing non-oil revenues through taxes and fees. The third focuses on financial reforms to improve how the country manages money.
Salih explained that local borrowing can help the government quickly pay salaries and cover daily expenses. But at the same time, it could reduce liquidity in banks, make loans more expensive, and weaken support for private businesses.
He said foreign borrowing could provide much-needed dollars and help keep financial stability in the country. However, it also comes with conditions, including economic reforms and higher debt payments in the future.
According to Salih, the best long-term solution is to strengthen non-oil revenues. He said Iraq needs better control over border crossings and customs, stronger tax collection systems, and more efforts to reduce the informal economy. He also stressed the importance of using modern financial systems like IFMIS to improve oversight, reduce corruption, and manage public spending more effectively.
Salih also called for major reforms in the banking sector, especially in state-owned banks like Rafidain and Rasheed. He said stronger banks can help provide development financing, expand digital banking services, support small businesses, and attract investors.
He added that activating the Public-Private Partnership Law could reduce pressure on the state budget and create more jobs, but only if Iraq provides a stable legal environment and seriously fights corruption.
In the end, Salih said the current crisis is a real test for Iraq’s oil-dependent economy. He stressed that speeding up financial reforms and diversifying the economy are now necessary steps if Iraq wants to handle future economic and political shocks more effectively.
