Eco
The financial advisor to the Prime Minister, Mazhar Mohammed Salih, confirmed on Saturday that Iraq's foreign reserves remain within relatively safe levels, emphasizing the importance of monitoring this trend and maintaining a safety margin. Salih stated, according to the official agency, that the International Monetary Fund estimated Iraq's total reserves at approximately $79.2 billion for 2026, based on its projections published in 2025, equivalent to about 9.6 months of goods and services imports. He added that the country's foreign reserves are currently nearing this level. He explained that covering more than six months of imports is considered a relatively safe level, according to the reserve efficiency indicator. He noted that the recorded decrease in reserves during the current year calls for greater caution and monitoring, not because they have reached a critical level, but out of concern that the downward trend might continue, potentially reducing the safety margin in the future. Salih clarified that foreign reserves play a pivotal role in supporting the stability of the Iraqi Dinar's exchange rate and constitute the primary line of defense against currency pressures, by enabling the Central Bank to provide dollars and meet legitimate demand, thereby contributing to overall stability and growth. He pointed out that heavy reliance on oil revenues remains one of the most significant sources of risk, as any decline in oil revenues leads to a decrease in government revenues and foreign currency flows, which could increase pressure on reserves and exchange rate stability. He stressed the importance of maintaining the independence of the Central Bank's monetary policy and avoiding the continuous use of foreign reserves or monetary financing to cover budget deficits, due to the potential depletion of reserves and increased inflationary and monetary pressures. Salih further stated that the sustainable solution lies in controlling government spending, particularly current expenditures, developing non-oil revenues, in addition to utilizing monetary policy tools to manage liquidity and maintain monetary stability. Salih concluded that the country's monetary situation remains reassuring and relatively safe at present, but the continued decline in reserves necessitates caution. He affirmed that the sustainability of this situation is linked to economic policy, public finance reform, and reducing dependence on oil.
