Shafaq News/ Iraq’s economy in 2024 was marked by milestones and challenges across various sectors, reflecting its resilience and opportunities for growth. The year saw remarkable achievements in oil production, electricity generation, financial stability, and agriculture. However, structural issues such as currency fluctuations, fiscal deficits, and corruption continued to hinder sustainable progress.

Oil Sector: Strategic Developments and Challenges

The oil sector, a cornerstone of Iraq’s economy, experienced significant advancements in 2024. The Ministry of Oil secured a series of strategic contracts and agreements to enhance national production, develop vital oil and gas fields, and contribute to global energy market decisions as part of the OPEC+ alliance.

On April 14, the Ministry of Oil signed a contract with Ukraine’s Ukrzemresurs LLC to develop the Akkas gas field in Al-Anbar, targeting an initial production capacity of 100 million standard cubic feet per day (mscf) within two years, with plans to expand to 400 mscf in four years.

Similarly, on October 31, the Ministry secured an agreement with China’s JERA and Iraq’s Petro Iraq to develop the Mansuriyah gas field in Diyala, which will add 300 mscf to Iraq’s energy grid.

To boost domestic production, the Ministry launched 29 new oil and gas projects on May 12 as part of the fifth supplementary and sixth licensing rounds. These projects aim to increase gas production by 800–850 mscf and crude oil output by 750,000 barrels per day. Contracts were signed on August 14 to develop 13 exploratory blocks and untapped fields, reflecting significant investment in Iraq’s energy potential.

Memorandums of Understanding were also signed to bolster Iraq’s energy infrastructure. On May 25, the Ministry of Oil signed an MoU with Siemens Energy and Schlumberger to invest in associated gas flaring and planning technical and financial proposals for field development.

On August 1, another MoU was signed with British Petroleum (BP) to rehabilitate and enhance production in four key northern oil fields in Kirkuk.

Infrastructure improvements included the launch of the Sumer oil tanker on September 9, a 200,000-barrel capacity vessel designed to enhance Iraq’s export logistics.

On November 5, Iraq reaffirmed its role in the OPEC+ alliance by agreeing to extend voluntary production cuts of 2.2 million barrels per day until the end of 2024, aligning with global efforts to stabilize oil markets. However, legal disputes persisted. On December 23, the Karkh Court of Appeal overturned rulings nullifying Kurdistan’s oil contracts with foreign firms, prompting nine companies to seek $24 billion in compensation for halted exports.

Electricity Sector: Expansion and Collaboration

Efforts to stabilize Iraq’s electricity supply saw substantial progress in 2024 through international agreements and domestic advancements.

On March 28, Iraq signed a five-year agreement with Iran’s National Gas Company to import 50 million cubic meters of natural gas daily, ensuring continued power generation. By March 30, Iraq inaugurated a power grid interconnection with Jordan, part of a tri-national collaboration with Egypt, which will ultimately deliver 500 megawatts at full capacity.

On July 19, the US State Department renewed its waiver allowing Iraq to continue purchasing energy from Iran, highlighting the importance of international cooperation in sustaining Iraq’s energy sector.

Iraq’s electricity generation reached an unprecedented 27,320 megawatts by July 2, a 3,000 MW increase from 2023. On November 9, Iraq finalized its integration with the GCC electricity grid, securing 3.94 terawatt-hours annually at competitive rates.

A deal signed with Turkmenistan on November 19 further diversified energy imports, providing an additional 20 million cubic meters of gas daily.

In addition, the Ministry of Electricity signed contracts to implement the Smart Energy Transformation Project on November 23, aiming to provide uninterrupted 24-hour electricity to over 130,000 households across Wasit, Kirkuk, Diyala, and Anbar provinces in its initial phase.

Trade and Agriculture: Food Security Achievements

The trade and agricultural sectors contributed significantly to Iraq’s economic resilience in 2024.

On August 12, the Ministry of Trade reported a 21% increase in wheat production, reaching 6.3 million tons, marking the second consecutive year of self-sufficiency in this essential crop. By December 26, Minister of Trade Atheer Al-Ghurairi confirmed that wheat reserves were sufficient to meet the country’s needs for more than a year, with essential food supplies secured for at least eight months, stabilizing markets.

Agricultural exports also thrived, with the Ministry of Agriculture reporting the export of over 400,000 tons of agricultural products within the first six months of the year on July 26. On September 29, Finance Minister Taif Sami signed a €262.16 million financing agreement with Austria’s Erste Group Bank to fund the development of advanced irrigation systems, by Austria’s Bauer Company, enhancing water efficiency and productivity across Iraq.

International Financial Engagements and Fiscal Policies

In 2024, Iraq deepened its engagement with global financial institutions. On May 16, the International Monetary Fund (IMF) projected Iraq’s economic growth at 1.4% for 2024, with an anticipated rebound to 5.3% in 2025. However, the IMF highlighted a widening fiscal deficit, rising to 7.6% of GDP in 2024 from 1.3% in 2023.

In a notable financial milestone, Iraq fully repaid IMF loans totaling $8 billion on May 18, as announced by Muzher Saleh, financial advisor to the Prime Minister.

On July 22, IMF data revealed that Iraq increased its gold reserves by 2.644 tons, bringing the total to 148.305 tons, further bolstering financial stability.

On November 28, Fitch Ratings affirmed Iraq’s credit rating at B- with a stable outlook, acknowledging government efforts to stabilize the economy despite governance weaknesses and elevated political risks. However, Fitch projected the fiscal deficit to increase to 8% of GDP, underscoring Iraq’s heavy reliance on oil revenues.

Highlighting the scale of fiscal policy, Iraq’s parliament approved a record-breaking budget of 211 trillion Iraqi dinars ($155 billion) on June 4. Operational expenditures accounted for 74% of the budget, while 95% of revenues relied on oil.

Financial Sector and Anti-Corruption Measures

The Central Bank of Iraq (CBI) implemented critical reforms in 2024 to enhance financial transparency and stability. On April 2, the CBI banned eight local banks from handling US dollar transactions to combat fraud and money laundering. A partnership with Oliver Wyman on August 31 initiated a comprehensive review of Iraq’s banking sector, while a memorandum signed with Frankfurt School, in coordination with the German Agency for International Cooperation (GIZ), as part of the EU and German-funded Financial Markets and Public Finance Project (FFM), focused on upgrading Iraq’s financial infrastructure and increasing market efficiency.

Expert Analysis: Progress and Challenges

Economic expert Ahmad Abed Rabbu provided insights into Iraq’s 2024 economic landscape, highlighting both achievements and unresolved challenges. While notable advancements were made in critical areas such as gas development and trade, structural issues continued to hinder the country’s economic stability.

Abed Rabbu praised Prime Minister Mohammed Shia Al-Sudani’s government for prioritizing investment in the gas sector and securing major oil contracts, which are vital to Iraq’s resource-dependent economy.

He noted that “2024 marked a significant step forward in modernizing the financial system through a shift toward electronic payment systems, reflecting a broader strategy to enhance efficiency and transparency. Additionally, the Ministry of Trade successfully stabilized markets and ensured food supplies, leading to improved conditions compared to previous years.”

Despite these advancements, Abed Rabbu pointed out persistent obstacles that undermined the economy's overall performance. One of the key concerns was the continued rise in the dollar exchange rate throughout 2024, exposing deep-rooted structural imbalances. “The government has not managed to address this issue,” he remarked, emphasizing the need for stronger fiscal and monetary policies.

The year’s budget, the largest in Iraq’s history, failed to reduce excessive spending or attract substantial foreign investment. Abed Rabbu said that many projects remained contract-based rather than representing genuine long-term investments. The expert also criticized the impact of sanctions on banks, which significantly disrupted the financial sector.

The Central Bank of Iraq, he noted, “has yet to find solutions to these ongoing issues.”

Corruption remained another major challenge. While external debt decreased, internal debt saw a significant rise, adding further strain to the country’s fiscal health. Abed Rabbu stressed the urgency of tackling these problems and called for 2025 to serve as a starting point for addressing major issues like electricity shortages and the housing crisis.