Sudani's financial advisor: Iraq will face a financial crisis in 2025

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[size=52]Sudani's financial advisor: Iraq will face a financial crisis in 2025[/size]

[size=45]Iraq’s prime minister’s financial adviser, Mazhar Salih, has warned that the country could face a budget crisis in 2025 due to lower oil prices, the country’s main source of revenue.
“We don’t expect major problems in 2024 but we need tighter fiscal discipline in 2025,” Salih told Reuters in an interview .
Iraq, OPEC’s second-largest oil producer, relies heavily on oil revenues.
The hydrocarbon sector accounts for the vast majority of export earnings and about 90 percent of state revenues. This heavy reliance on oil makes Iraq particularly vulnerable to fluctuations in global crude prices.
Still, Iraq has raised its 2024 budget even after record spending in 2023 when more than half a million new employees were hired in the already bloated public sector and a massive infrastructure upgrade began across the country.
Saleh said the 2024 budget had risen to 211 trillion dinars ($161 billion) from 199 trillion dinars ($153 billion) in 2023, with a projected deficit of 64 trillion dinars.
The Iraqi government has budgeted for an oil price of $70 per barrel in 2024, about $6 less than the average price this year.
Saleh added that paying salaries and pensions on time remains a top priority. Salaries and pensions cost 90 trillion dinars ($69 billion), more than 40 percent of the budget, and are a key factor in social stability in Iraq.
“The government will pay salaries even if it costs it everything. Salaries are sacred in Iraq,” he said.
He said infrastructure development could focus on more strategic projects, such as major roads and bridges in the capital Baghdad, if the country finds itself in a financial crisis.
He said Iraq is trying to improve its financial situation by increasing non-oil revenues through improved tax collection, but is not considering imposing any new taxes.
Salih estimated that Iraq loses up to $10 billion annually due to tax evasion and customs-related problems.
Concerns over the 2025 budget reflect challenges facing the global oil market. Oil prices have been on a downward trend since mid-2022, with Brent crude falling from more than $120 a barrel to around $71 in today’s trading.
The decline is largely due to weak global demand, especially from China, the world’s largest oil importer, due to its slowing economic growth.[/size]
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