Can Iraq translate renewed oil flows and fiscal expansion into sustainable economic stability?
The Thirteenth Edition of the Iraq Economic Review explores this question at a pivotal moment for Iraq’s economy. As oil exports from the Kurdistan Region resumed after more than two years of disruption, this edition examines whether the new oil-for-budget arrangement between Baghdad and Erbil represents a durable step toward fiscal coordination—or merely a temporary political truce.
This edition highlights the mechanics and implications of the agreement governing KRG oil exports through the Iraq–Türkiye Pipeline. While the arrangement has restored cash flow and eased immediate salary pressures, it also assesses the structural risks that remain, including unresolved legal disputes, outstanding arrears to international oil companies, oil price volatility, and Iraq’s broader fiscal vulnerabilities. By evaluating multiple implementation scenarios, the analysis questions whether the deal can evolve into a stable, rules-based fiscal framework.
The review also examines Iraq’s federal budget outlook in a shifting oil price environment. With the tailwinds of high oil prices fading, the next government is expected to confront widening deficits, rising sovereign debt, and increasing debt-servicing burdens. The edition considers the trade-offs between domestic and foreign borrowing, the risks of debt monetization, and the implications for Iraq’s long-standing social contract. At the same time, it identifies structural improvements—including banking sector reform, macroeconomic stabilization, and gradual gains in non-oil revenues—that may help cushion the adjustment period.
This edition underscores the difficult policy choices ahead as Iraq navigates lower oil prices, growing debt pressures, and the need for deeper fiscal and institutional reform to secure long-term economic resilience.
Contribution includes the following:
- Mohammed Hussein - KRG Oil Exports: Progress Toward Stability or Temporary Truce?
- Ahmed Tabaqchali - Then and now: Budgets, oil prices and the economy
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