Iraq's budget under fire as oil prices tank
Shafaq News/ Iraq’s oil prices may have hit their floor, says economist Hamza Al-Jawahiri, who slammed Baghdad’s budget projections as “naively optimistic” and out of touch with market realities.
Donald Trump's tariff announcements triggered a notable decline in oil prices, primarily driven by fears of a global economic slowdown. Specifically, Brent crude fell to roughly $65 a barrel, a significant drop from previous levels exceeding $75.
"Oil prices will not drop much further, as many fields will struggle to remain operational if prices are economically unviable," Al-Jawahiri stated to Shafaq News, noting that Iraq's production costs remain among the lowest globally, providing a relative advantage.
He added that Iraq needed to set a much lower price assumption in the budget; however, “government optimism was excessive, and now it is essential to reduce expenditures to a minimum.” With oil revenues accounting for roughly 93% of Iraq’s national income, most of which goes to cover public sector salaries, the stakes are high.
Financial advisor to the Iraqi Prime Minister, Mudhhir Mohammed Saleh, reassured that despite falling oil prices, the government has secured funds to pay salaries and pensions in the coming period.
“Securing these payments remains a top priority,” he said, with no concerns about salary distribution despite the economic downturn.
"Even during past oil price declines, the government ensured that salaries were paid. The 2025 budget fully guarantees the payment of salaries and pensions," Saleh added.
