Iraq leans on central bank reserves to weather oil export collapse

Iraq is sustaining public salaries and the basic operations of the state by borrowing indirectly from the Central Bank of Iraq's foreign reserves, a stopgap that has so far kept the government solvent and the dinar relatively stable through the wartime collapse of oil exports.

Oil sales usually provide about 90 percent of state revenue, but averaged only about $1 billion per month across April and May after the closure of the Strait of Hormuz stranded most of Iraq's southern crude — roughly one-seventh of their average in 2025. By contrast, Iraq's current spending averaged $7.58 billion a month in 2025, of which salaries, pensions and welfare alone consumed $5.67 billion, according to an Iraq Oil Report analysis of Finance Ministry data.