Iraq’s economy nearing breaking point, expert says

Shafaq News – Baghdad

Iraq is heading toward a major economic shock, economist Manar Al-Obaidi warned on Saturday, citing decades of structural neglect and the government’s reliance on "short-term remedies."

In a post on Facebook, Al-Obaidi accused officials of promoting an “economic illusion” that Iraq can overcome its fiscal crisis without deep reform, even as essential services near collapse, water and food security deteriorate, and financial reserves shrink.

He cautioned that policymakers are likely to choose temporary fixes again, relying on increased cash issuance, more borrowing, or expanded consumption-driven spending instead of structural change.

The next government, he warned, faces a binary choice: either initiate painful restructuring — cutting operating costs, reforming subsidies, and rebalancing public spending — or delay once more and aggravate long-term damage.

“Reform will provoke public anger, but delaying it will make the eventual collapse far harsher,” he said, urging decision-makers to prioritize sustainability over short-term approval.

Iraq’s economy has long depended on oil for over 90 percent of state revenue, leaving the country highly exposed to price fluctuations, while a swollen public payroll, heavy subsidies, and minimal private-sector participation have drained resources without creating sustainable growth.

Read more: Without oil: Iraq's economic future hanging in the balance