AGP Executive Report

IMF Support: The Fund says it is ready to provide Iraq with financing and policy advice through a requested program, as Baghdad faces mounting economic pressure. Import Dependence: A prime ministerial adviser says Iraq imports about 95% of its market needs, with private-sector imports costing roughly $50 billion a year; he urged support for local producers and stronger links between trade and agriculture. Trade and Infrastructure: At an OIC meeting in Baghdad, Prime Minister Ali al-Zaidi proposed linking member states’ energy grids, transport networks, digital payments and industrial zones to strengthen trade and resilience. War’s Economic Toll: Iraq estimates the regional conflict has cost it $60 billion, largely through lost oil exports. Crude output has since recovered, reaching an average 4.399 million barrels per day in September. Oil Sector: Iraq’s oil minister called US companies key partners and said the government aims to speed contracts and remove obstacles to energy projects. Bank Oversight: More than 17 billion dinars reportedly went missing from a state-owned bank; the bank’s identity and whether an investigation has begun remain unclear.

Economic Shock: Iraq says the Middle East war has cost it about $60 billion, as disruption to Strait of Hormuz shipping forced oil production cuts. Oil provides roughly 90% of state revenue; reserves have fallen by $20 billion and the dinar has been devalued. Investment Climate: A US State Department report points to opportunities in energy, infrastructure and agriculture, but says corruption, red tape, regulatory uncertainty and payment delays deter foreign investors. Trade Links: Iraq has resumed commercial Gulf shipping after more than 50 years, with the first Iraqi Line voyage sailing from Jebel Ali to Umm Qasr. Oil and Gas: Operations at four Kirkuk oilfields have shifted to a BP-linked entity, with a target of 450,000 barrels a day and plans to use associated gas.

War’s Economic Cost: Foreign Minister Fuad Hussein puts Iraq’s losses from the US-Iran conflict at about $60 billion. Oil exports, which generate roughly 90% of state revenue, fell sharply after the Strait of Hormuz was blocked; reserves have dropped by $20 billion and the dinar was devalued. Banking Pressure: The International Development Bank denies US allegations that it helped Iran access dollars after Washington sanctioned it. The bank says it is working with Iraqi regulators to maintain permitted services and protect depositors. Government Spending: Parliament completed Prime Minister Ali al-Zaidi’s cabinet, approving 11 ministers and three deputy prime ministers. A Najaf cleric criticized the new posts as an unnecessary burden during a financial crisis. Oil Investment: BP’s partnership to develop four Kirkuk oilfields aims to lift output to 450,000 barrels a day, while drilling has begun on a fourth well in Najaf’s Al-Qarnain block.

Government and Reform: Parliament completed Prime Minister Ali al-Zaidi’s cabinet, approving 11 ministers and three deputies while leaving the migration portfolio vacant. The new digital economy minister says priorities include expanding e-payments and strengthening data protection, but weak infrastructure and fragmented government systems remain obstacles. Currency and Banking: The dinar’s official rate fell from 1,320 to 1,520 per dollar, lifting passport and digital-service fees and squeezing traders. The Central Bank will let eligible travelers access $2,000 every two months. US sanctions on Iraq’s International Development Bank over alleged Iran-linked transactions could add pressure on financial channels. Energy and Outlook: BP is taking over four Kirkuk oilfields, with plans to help raise output to 450,000 barrels a day. The IMF says Iraq is among the Gulf economies hardest hit by Strait of Hormuz disruption, as the wider GCC faces a projected 4.8% contraction this year.

Currency Shock: Baghdad’s markets remained nearly deserted after Iraq raised the official dollar rate from 1,320 to 1,520 dinars. Traders report heavy losses and uncertainty over prices, while reports of counterfeit 25,000-dinar notes have added to cash-market concerns. Oil and Gas: BP has taken over operations at Kirkuk’s four main oilfields, with a target of 450,000 barrels a day and plans to capture 500 million cubic feet of gas daily. Basrah crude prices edged higher even as global benchmarks fell. Oil Payments: SOMO has begun settling outstanding payments to Gulf Keystone with an additional oil cargo, a step the company says will support cash flow and Shaikan field development. Iraq’s oil revenues had fallen 53% through July. Digital Infrastructure: Iraq plans to open its first satellite ground station in Baghdad on October 18, offering government bodies and businesses a domestic communications gateway.

Investment: Iraq held talks with Chinese firms on investment, banking and trade, while a proposed $250 million Kempinski hotel complex was discussed with the National Investment Commission. JICA is also exploring financing for household solar projects. Trade and logistics: Saudi Arabia’s NEOM port and CEVA Almajdouie are planning a multimodal corridor linking Europe and Iraq, while Turkey says it wants to fill the Iraq-Turkey oil pipeline, which can carry 1.5 million barrels a day. Economic outlook: The IMF forecasts Iraq’s economy will shrink 16% in 2026 amid regional disruption. Oil revenues fell 53% through July, though foreign-exchange reserves stood at $85 billion. Costs and currency: Iraq waived customs duties on food and medicines as the dollar climbed to 167,000 dinars in Baghdad and Erbil; the Central Bank says traders will not bear the difference under the new exchange rate.

Currency Pressure: The dollar rose to 167,000 dinars per $100 in Baghdad’s wholesale market, adding pressure on importers and households after Iraq reset its official exchange rate. Cost Relief: The government waived customs duties on imported food and medicines, retroactive to October 7, to help contain price increases. Economic Outlook: The IMF projects Iraq’s economy will contract 16% this year as regional conflict disrupts oil shipments. In Bangkok, Finance Minister Faleh Sari said Iraq aims to reduce oil dependence, strengthen the private sector and complete financial reforms within two years. Oil and Energy: DNO’s Kurdistan Region oil sales jumped 94% year on year in the third quarter as production resumed after a shutdown. In Riyadh, Iraq’s oil minister joined OPEC+ and global energy talks, while Prime Minister Ali al-Zaidi met Saudi Crown Prince Mohammed bin Salman to discuss cooperation amid regional disruption.

Economic Outlook: The IMF forecasts Iraq’s economy will contract 16% in 2026 as war-related disruptions hit energy production and shipping through the Strait of Hormuz. It expects a sharp rebound in 2027 if exports and logistics recover. Dinar and Public Finances: The Central Bank says traders will not absorb the exchange-rate change, while officials say reserves can support the devaluation. But the weaker dinar is squeezing household purchasing power, and Iraq faces pressure to curb spending in its 2027 budget. Energy Investment: Iraq is seeking Japanese financing for residential solar, while its North Oil Company aims to end gas flaring at its fields by 2027. Baghdad and Riyadh also discussed energy cooperation and electricity stability. Trade and Projects: Customs revenue rose 32% year on year, and Iraq has invited international companies to invest in managing Mosul airport.

Economic Outlook: The IMF projects Iraq’s economy will contract 16% in 2026 before rebounding 19% in 2027, as disrupted oil revenues widen the current-account deficit and push inflation higher. Currency and Banking: The Central Bank says traders won’t pay the exchange-rate difference on import transfers confirmed before the October 7 dinar adjustment. It also raised the overseas daily card-purchase limit to $3,333, subject to a monthly cap of five million dinars. Power and Gas: Kurdistan plans to extend 24-hour electricity across the region by year-end and make the sector financially self-sustaining by 2028, though monthly generation costs exceed $200 million. Officials say gas output could rise from one billion to as much as three billion cubic feet a day. Energy Investment: Iraq is seeking Algerian expertise to capture and process associated gas, while the IsDB and EBRD are exploring joint financing in Iraq for energy, infrastructure and private-sector development.

Fiscal Strain: Iraq’s dinar devaluation is raising import costs as the government tries to fund salaries. Budget execution through July showed a 26.3 trillion-dinar deficit, while debate over the 2027 budget includes spending cuts and ministry mergers — alongside proposals to create new portfolios. Non-oil Revenue: Customs receipts rose 32% year on year in September to 442.3 billion dinars, as authorities push to strengthen income beyond oil. Investment: Iraq is seeking international operators to develop Mosul airport as a regional services hub. Energy: Nasiriyah oil-field output has increased by 10,000 barrels a day, while Baghdad plans to raise electricity imports from Turkey to 2,000 megawatts. The government is also pursuing gas investment to reduce reliance on imports. Economic Ties: US envoy Tom Barrack says Washington and Baghdad are moving toward a broader partnership focused on economic cooperation.

Oil & Gas: Two new wells lifted output at Nasiriyah by 10,000 barrels per day. Baghdad is also seeking gas investment to cut imports and pursuing an oil-for-financing deal with Türkiye for the Development Road. Investment: Iraq has invited international airport operators to help develop Mosul airport, seeking partners beyond a new passenger terminal. Public Finances: Customs receipts rose by 108 billion dinars ($71 million) year on year in September, while non-oil revenues reached 8.7 trillion dinars through July. But the 2027 budget faces a projected 50 trillion-dinar deficit, with a growing public payroll adding pressure. Trade & Markets: Iraqi crude shipments to India more than doubled in September to 4.41 million tonnes. The dinar traded near 164,000 per dollar on parallel exchanges, while authorities halted poultry and egg tariffs amid food-price pressures.

Energy Investment: Prime Minister Ali al-Zaidi met TotalEnergies and ConocoPhillips executives to discuss expanding oil and associated-gas production at Basra’s Bin Umar field, part of a push to end gas imports. Power and Procurement: The World Bank discussed electricity upgrades, solar projects and grid efficiency with Iraqi officials, alongside plans to modernize public procurement through e-tendering and improved transparency. Public Finances: Non-oil revenues rose 23.5% to 8.7 trillion dinars by July, but spending reached 65.42 trillion against total revenues of 39.09 trillion, leaving a large deficit. The dinar’s official rate has also been lowered, prompting a legal challenge. Trade and Infrastructure: Iraq and Turkey are discussing an oil-for-financing arrangement for the Development Road project, while a separate $7–8 billion Faw refinery project remains stalled over funding.

Export Routes: Iraq expects to finish negotiations by year-end on a pipeline carrying oil from Haditha to Syria’s Baniyas coast, reviving a route to the Mediterranean. A planned Basra–Haditha link would connect southern production to the corridor and reduce reliance on Gulf shipping. Currency & Prices: The dinar’s devaluation continues to pressure household budgets. Baghdad has paused tariffs on imported poultry and eggs amid food inflation, while economists say the wider price surge remains limited. Oil Income: Iraq is exporting about 2.7 million barrels a day, with oil revenues reported at roughly $5 billion a month. Investment & Trade: Baghdad is also pursuing an oil-for-funding agreement with Turkey for its development road project, and Lebanon’s exports to Iraq topped $595 million in the second quarter.

Currency and Prices: The dollar eased to about 162,000–164,000 dinars per $100 across Iraq’s parallel markets, after spiking above 170,000 following the official rate change to 1,520 dinars per dollar. Economists cautioned that the adjustment may not translate into an equal rise in prices, while authorities stepped up food-price checks and suspended duties on poultry and eggs to ease pressure on consumers. Trade and Infrastructure: Iraq is pursuing an oil-backed financing pact with Turkey for the Development Road, linking the Grand Faw Port to European markets. Agriculture: The government, FAO and World Bank launched a project to improve farm management and strengthen dairy production and marketing. Energy: Iraq’s oil exploration company and KAR Group signed a seismic survey contract for the Sasan and Alan blocks in Nineveh. Regional Trade: Lebanon’s exports to Iraq rose 67.2% quarter-on-quarter to nearly $597 million in Q2, led by gold shipments.

Household Costs: Iraq has begun selling construction materials directly to citizens, with cash and installment options, as the government tries to soften the impact of the dinar’s depreciation. Import Payments: The Central Bank told merchants to check that pre-October 7 import transfers were completed and warned banks not to charge extra exchange-rate costs on transfers already covered at the old rate. Dinar and Budget: The official rate has shifted from 1,320 to 1,520 dinars per dollar, intensifying a dispute over the 2027 budget, with lawmakers pressing the government to reconsider the move. Oil Trade: Chinese independent refiners are buying Iraqi crude as Iranian supplies shrink, offering Iraq an outlet amid shipping disruption. Baghdad is also pursuing Syria as an alternative route for crude exports.

Currency and Budget: The dinar’s sharp devaluation has sparked a fight over the 2027 budget, with lawmakers urging Prime Minister Ali al-Zaidi to reverse the move before the draft reaches parliament by October 15. The weaker rate is already pushing food prices higher. Oil Exports: Iraq plans to move crude by truck through Syria, offering a route around Strait of Hormuz risks; officials have also discussed a pipeline, with construction potentially starting in early 2027. Iraq is exporting about 2.7 million barrels a day, while Chinese refiners are turning to Iraqi crude as Iranian supply tightens. Climate and Investment: Iraq has launched updated climate targets through 2035, linking emissions cuts to investment, energy and water security, and economic diversification. Markets: Trading value on the Iraq Stock Exchange nearly doubled in September.