Shafaq News

Delays in submitting Iraq’s 2025 budget to parliament could exacerbate the country’s financial and economic crisis, three Iraqi economic experts warned, citing risks of slowed investment, weakened trade, and a possible recession in the coming months.

The experts, speaking to Shafaq News Agency, criticized the government for failing to send the budget tables so far and for not taking clear steps to reprioritize spending.

Kazem Al-Shammari, a member of the Parliamentary Economic Committee, stressed that the budget is not merely a matter of approval or voting, highlighting that it determines financial allocations for investment projects and essential services, such as social welfare and the food ration card, which affect the largest segment of the population.

While warning that the delay directly affects the government’s ability to meet its obligations to citizens, he emphasized that the Parliament has repeatedly urged it to submit the budget tables, yet these calls have gone unanswered.

“The government is clearly failing in its constitutional duties,” Al-Shammari clarified.

Recession Threat

Iraq’s 2025 budget, one of the largest in the nation’s history at 198.9 trillion Iraqi dinars (around $153 billion), was approved in June 2023 and designed to cover fiscal years 2023 through 2025 with the same allocations each year, unless amended by the cabinet and approved by lawmakers.

Earlier, Finance Minister Taif Sami highlighted unresolved conflicts with the Kurdistan Regional Government (KRG) over oil contracts and revenue-sharing as a major obstacle. Compounding the issue, recent legislative changes in the Kurdistan Region affecting oil agreements have further delayed the submission of financial tables needed for the finalization of the 2025 budget.

Ahmed Eid, an economic researcher, warned that the delay is affecting the national economic cycle. “The budget is the main driver of the national economy. Without it, projects halt, job opportunities shrink, and cash flow declines,” he observed.

Eid emphasized that the absence of a clear financial vision has created market stagnation, unsettled investors, and weakened the capacity of both public and private sectors to finance production and services.

Highlighting the broader economic implications, he stressed that stimulating markets and boosting development are essential to reducing unemployment and improving public services. The release of year-end financial data, Eid noted, is a crucial step to achieve these goals.

Policy Shortcomings

Economic expert Mustafa Al-Faraj described the delay as a clear violation of the 2023 three-year Federal Budget Law, which mandates annual budgets be approved at the start of each year.

“The budget was approved based on $70 per barrel of oil, but prices have fallen below $65. This requires revising spending plans and cutting excess expenditures,” Al-Faraj emphasized.

He pointed out that the absence of adjustments despite oil price fluctuations exposes governmental shortcomings in financial management, particularly given that Iraq’s economy relies on oil exports for more than 90% of revenue.

Stressing that the delay has caused market stagnation and affected wide social groups, including employees, retirees, contractors, and investors, Al-Faraj attributed the problem to ongoing political disputes between the government and parliament, identifying this as the primary cause of the hold-up, especially as the current parliamentary term approaches its conclusion.

Read more: Iraq’s budget: political fiscal gaps threaten national stability in 2025

Salaries Still Flow

In contrast, economist Karim Al-Hilu downplayed concerns about a slowdown, offering a different perspective.

“Monthly salaries continue to be paid, representing two-thirds of the budget, and are directly injected into markets through spending and circulation,” Al-Hilu confirmed.

He added that foreign remittances remain open, goods are available both locally and from imports, noting that government investment projects in Baghdad and other provinces have continued, supporting the industrial and construction sectors.

“The real challenge is not the absence of a budget, but the lack of genuine support for domestic products facing unfair competition from imports,’’ Al-Hilu concluded.

Written and edited by Shafaq News staff.