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Iraq Faces 2025 Fiscal Squeeze Amid Oil Price Decline, Adviser to PM Says 

A general view shows an oil rig used in drilling at the Zubair oilfield in Basra, Iraq, July 5, 2022. (Reuters)
A general view shows an oil rig used in drilling at the Zubair oilfield in Basra, Iraq, July 5, 2022. (Reuters)
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Iraq Faces 2025 Fiscal Squeeze Amid Oil Price Decline, Adviser to PM Says 

A general view shows an oil rig used in drilling at the Zubair oilfield in Basra, Iraq, July 5, 2022. (Reuters)
A general view shows an oil rig used in drilling at the Zubair oilfield in Basra, Iraq, July 5, 2022. (Reuters)

Iraq faces a budget crunch in 2025 due to the slump in the price of oil, the overwhelming source of government revenue, a top economic adviser to Prime Minister Mohammed Shia al-Sudani said.

"We don't anticipate major problems in 2024, but we need stricter financial discipline for 2025," Mudher Saleh told Reuters in an interview late on Monday.

Iraq, OPEC's second-largest producer, is heavily dependent on oil revenues. The hydrocarbons sector accounts for the vast majority of export earnings and some 90% of state revenue.

This huge reliance on oil makes Iraq particularly vulnerable to fluctuations in global crude prices.

Still, Iraq increased its budget in 2024 even after record spending in 2023, when more than half a million additional employees were hired into the already-bloated public sector and a capital-intensive nationwide infrastructure revamp began.

The 2024 budget rose to 211 trillion dinars ($161 billion) from 199 trillion dinars ($153 billion) in 2023, maintaining a projected deficit of 64 trillion dinars, Saleh said.

The budget assumes an oil price of $70 per barrel in 2024, around $6 less than the likely average price this year.

Saleh said that paying salaries and pensions on time remain a top priority. They account for 90 trillion dinars ($69 billion), or over 40% of the budget, and are a key factor of social stability in Iraq.

"The government will pay salaries even if it costs everything. Salaries are holy in Iraq," he said.

Infrastructure development, meanwhile, could be refocused on the most strategic projects - such as key road and bridge works in the capital Baghdad - if the state finds itself in a financial crunch, he said.

To bolster finances, Iraq is focusing on increasing non-oil revenues through improved tax collection but is not exploring any new levies, Saleh said.

He estimated that Iraq loses up to $10 billion annually due to tax evasion and customs-related problems.

Concerns for the 2025 budget reflect a challenging global oil market. Oil prices have been on a downward trend since mid-2022, with Brent crude, the international benchmark, falling from over $120 per barrel to below $75 in recent days.

This decline is largely attributed to weakening global demand, particularly from China, the world's largest oil importer, as its economic growth slows down.

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Arab World

In Ruined Homes, Palestinians Recall Assad's Torture

The last lesson in this Yarmuk elementary school is still on the board, 12 years after the Palestinian camp was engulfed in Syria's civil war. Aris MESSINIS / AFP
The last lesson in this Yarmuk elementary school is still on the board, 12 years after the Palestinian camp was engulfed in Syria's civil war. Aris MESSINIS / AFP
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In Ruined Homes, Palestinians Recall Assad's Torture

The last lesson in this Yarmuk elementary school is still on the board, 12 years after the Palestinian camp was engulfed in Syria's civil war. Aris MESSINIS / AFP
The last lesson in this Yarmuk elementary school is still on the board, 12 years after the Palestinian camp was engulfed in Syria's civil war. Aris MESSINIS / AFP

School lessons ended in Syria's biggest Palestinian refugee camp on October 18, 2012, judging by the date still chalked up on the board more than a decade later.
"I am playing football"; "She is eating an apple"; "The boys are flying a kite" are written in English.
Outside, the remaining children in the Damascus suburb of Yarmuk now play among the shattered ruins left by Syria's years of civil war.
And as the kids chase through clouds of concrete dust, a torture victim -- freed from jail this month when opposition factions toppled Bashar al-Assad's government -- hobbles through the rubble.
"Since I left the prison until now, I sleep one or two hours max," 30-year-old Mahmud Khaled Ajaj told AFP.
Since 1957, Yarmuk has been a 2.1-square-kilometer (519-acre) "refugee camp" for Palestinians displaced by the founding of the modern Israeli state.
Shattered city
Like similar camps across the Middle East, over the decades it has become a dense urban community of multi-storey concrete housing blocks and businesses.
According to the United Nations agency for Palestinian refugees, UNRWA, at the start of Syria's conflict in 2011 it was home to 160,000 registered refugees.
Rebellion, air strikes and a siege by government forces had devastated the area and left by September this year only 8,160 people still clinging to life in the ruins.
With Assad's fall, more may return to reopen the damaged schools and mosques, but many like Ajaj will have terrible tales to tell of Assad's persecution.
The former Free Syrian Army opposition fighter spent seven years in government custody, most of it at the notorious Saydnaya prison, and was only released when Assad's rule ended on December 8.
Ajaj's face is still paler than those of his neighbors, who are tanned from sitting outside ruined homes, and he walks awkwardly with a back brace after years of beatings.
At one point, a prison doctor injected him in the spine and partly paralyzed him -- he thinks on purpose -- but what really haunts him was the hunger in his packed cell.
"My neighbors and relatives know that I had little food, so they bring me food and fruit. I don't sleep if the food is not next to me. The bread, especially the bread," he said.
"Yesterday, we had bread leftovers," he said, relishing being outside after his windowless group cell, and ignoring calls from his family to come to see a concerned aunt.
"My parents usually keep them for the birds to feed them. I told them: 'Give part of them to the birds and keep the rest for me. Even if they are dry or old I want them for me'."
As Ajaj spoke to AFP, two passing Palestinian women paused to see if he had any news of missing relatives since Syria's ousted leader fled to Russia.
The International Committee of the Red Cross has documented more than 35,000 cases of disappearances under Assad's rule.
Ajaj's ordeal was extreme, but the entire Yarmuk community has suffered on the frontline of Assad's war for survival, with Palestinians roped into fighting on both sides.
Bullets lodged
The graveyard is cratered by air strikes. Families struggle to find the tombs of their dead amid the devastation. The scars left by mortar strikes dot empty basketball courts.
Here and there, bulldozers are trying to shift rubble and the homeless try to scavenge re-usable debris. Some find work, but others struggle with trauma.
Haitham Hassan al-Nada, a lively and wild-eyed 28-year-old, invited an AFP reporter to run his hand over lumps he says are bullets still lodged in his skull and hands.
His father, a local trader, supports him and his wife and two children after Assad's forces shot him and left him for dead as a deserter from the government side.
Nada told AFP he fled service because, as a Palestinian, he did not think he should have to serve in Syrian forces. He was caught and shot multiple times, he said.
"They called my mother after they 'killed' me, so she went to the airport road, towards Najha. They told her 'This is the dog's body, the deserter'," he said.
"They didn't wash my body, and when she was kissing me to say goodbye before they buried me, suddenly and by God's power, it's unbelievable, I took a deep breath."
After Nada was released from hospital, he returned to Yarmuk and found a scene of devastation.