Iraq, a key OPEC oil producer, invested close to $19 billion in development projects in 2024, significantly reducing its projected budget deficit thanks to higher-than-expected oil revenues.
According to a recent report from the Iraqi Finance Ministry, actual spending for 2024 reached IQD150 trillion (approx. $115 billion), while revenues stood at IQD140 trillion ($107 billion). This resulted in an actual deficit of IQD10 trillion (approx. $8 billion), a substantial improvement compared to the previously forecasted shortfall of $49 billion.
Breakdown of 2024 Spending and Revenue
Current expenditures, primarily public sector wages and government procurement, totaled IQD125 trillion ($96 billion).
Capital expenditures for development projects amounted to IQD25 trillion ($19 billion).
Oil income comprised over 90% of total revenues, contributing nearly IQD127 trillion ($97 billion), with the remainder coming from taxes and customs fees.
The significant reduction in the budget deficit was largely attributed to oil prices averaging nearly $80 per barrel, exceeding the government’s conservative estimate of $70 per barrel, which was used in the three-year budget plan (2023–2025) approved in mid-2023. The budget also assumed crude exports of 3.4 million barrels per day (bpd).
Annual spending for 2024 was originally set at $153 billion, with a projected deficit of $49 billion. However, the Iraqi Parliament granted the Finance Ministry flexibility to adjust expenditure throughout the year based on market conditions.
2025 Outlook and Deficit Concerns
Looking ahead to 2025, officials have warned that the deficit could expand if oil prices dip below the assumed $70 per barrel or if exports fall short of the 3.4 million bpd target.
Mudhar Saleh, financial adviser to Prime Minister Mohammed Al-Sudani, stated that spending for 2025 is projected to remain at IQD200 trillion ($153 billion), with current expenditures expected to represent 68–70% of the total budget. He noted that the anticipated deficit stands at around IQD64 trillion, to be financed through domestic borrowing, though it may increase under less favorable oil market conditions.
Meanwhile, Nabil Al-Marsoumi, an economics professor at Basra University, revealed that the actual deficit for 2023 had reached nearly IQD80 trillion ($68 billion), after government spending surged to $171 billion, well above original budget estimates.
Source: Zawya Projects
