Iraq

This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile Iraq?s complex and volatile political situation limits policy predictability. Oil exports will keep the current account in a surplus, while large domestic spending plans will return the fiscal position to deficits. --After over a year of political deadlock, parliament approved the formation of a government in October 2022. --Given large spending plans, we expect the 2023 budget will revert to a deficit position after a large surplus in 2022, as the new government addresses spending pressure in the economy. --Iraq?s institutional profile remains weak, with a divided society and fragile security situation. --A sizable current account surplus over the forecast horizon will add

...The formation of a government in October 2022 has brought respite from over a year of political deadlock. The delay stemmed from members of parliament representing the Sadrist Movement, the largest party in parliament, attempting to form a coalition government without other major Shia-majority parties (the Coordination Framework). However, those parties were eventually able to block the Sadrist Movement's efforts and form a new government centered on Prime Minister Mohammed Al-Sudani. Parliament passed a record multi-year budget for calendar years 2023-2025 with an emphasis on public spending and development. After registering a fiscal surplus estimated at nearly 12% of GDP in 2022, we expect expenditure to increase significantly, which is broadly in...

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