Even with devalued currency, new Iraqi budget proposes record deficits

A leaked copy of the Cabinet's provisional 2021 draft budget confirms a major currency devaluation — and an unchecked trend of unsustainable spending.
Even with devalued currency, new Iraqi budget proposes record deficits
Iraqis who recently graduated with engineering degrees protest for jobs outside the main gates of the Basra Oil Company headquarters on Oct. 11, 2020, forcing workers to use alternate entrances. (JASSIM AL-JABIRI/Iraq Oil Report)

Iraq is moving forward with plans to devalue its currency by nearly 23 percent in response to a dire financial crisis — an extreme policy measure that will not come close to balancing a 2021 budget projected to authorize record spending.

According to a provisional draft of the 2021 budget, which was widely leaked on Thursday, the Central Bank of Iraq (CBI) will move its long-standing currency peg from 1,182 Iraqi dinars per dollar to 1,450 dinars per dollar. Iraq Oil Report first reported the imminent devaluation on Monday, after highlighting the likelihood of a devaluation two months ago.

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