Economic Outlook: Iraq’s Financial Challenges Amid Declining Oil Prices
Economist Nabil Al-Marsoumi has provided insights into the recent decline in oil prices, warning of a potential financial crisis facing Iraq.
In a recent analysis, Al-Marsoumi noted that oil prices have dropped to $70 per barrel. This decline is attributed to successful American pressure, which has led OPEC Plus to abandon its voluntary production cuts of 2.2 million barrels per day. Furthermore, an agreement has been reached to increase oil production by 120,000 barrels per day over the next 18 months, starting in April. For Iraq specifically, this increases its oil production by approximately 12,000 barrels daily, suggesting that the price per barrel may fall to around $67.
Projected Oil Revenues
Al-Marsoumi projected that Iraq’s total oil revenues could reach approximately 108 trillion dinars, with net revenues (post-expenses for licensing companies) estimated at 95 trillion dinars. He stressed that these net oil revenues would only be sufficient to cover salaries and social welfare programs. Consequently, the Iraqi finance sector may face significant challenges in managing revenue streams necessary to meet escalating public expenditures.
In light of the anticipated budget deficits, the government is likely to rely on internal and external borrowing to bridge the growing financial gap.
The analysis emphasizes the need for strategic financial planning as Iraq navigates these economic hurdles, especially in the context of fluctuating global oil prices and increasing domestic financial obligations.
