Inflation risks: Iraq’s foreign reserves fall to $92B

Shafaq News – Baghdad

Iraq’s foreign currency reserves have fallen to their lowest level in two years, raising concerns over inflation and monetary stability, according to Manar al-Obaidi, head of the Iraq Future Foundation.

Al-Obaidi said that reserves peaked at $120B in mid-2023, supported by high oil revenues, compared with $91B at the end of 2022. Since then, however, they have steadily declined, reaching $92B in June 2025 — a 22% drop, equal to an average loss of $1B per month. Over the same period, the money supply has held at around 100T dinars.

He warned that the mismatch between declining reserves and a stable monetary base could fuel medium-term inflation, widen Iraq’s balance-of-payments deficit, and erode financial stability if oil prices fall and import costs rise. Projections suggest reserves could slip below $85B by the end of 2025 if the current pace of depletion continues.

Although Iraq’s reserve levels remain relatively high by international standards, al-Obaidi said the downward trend poses “a real threat in the medium and long term.” He urged a financial reform plan focused on cutting non-productive public spending, boosting exports, and reducing reliance on imports, stressing that halting the decline in reserves has become “an urgent necessity” to protect Iraq’s economic stability.