Baghdad (IraqiNews.com) – A report issued by the International Monetary Fund (IMF) indicated that Iraq would experience increased financial constraints in 2026 as a result of growing energy subsidy costs, rising governmental debt, and greater borrowing prices in foreign markets.
According to the report, Iraq is among the countries with significant amounts of energy subsidies, which account for about six percent of its GDP.
These factors make the public budget more subject to swings in oil and gas prices, which puts further strain on public finances if global energy costs continue to climb, local news outlet Shafaq News reported.
The IMF noted that Iraq is one of several economies that have seen a considerable rise in public debt compared to pre-COVID-19 levels.
Debt levels in 2026 are expected to climb significantly compared to 2019, reflecting a regional pattern prevailing in several nations with large budget deficits.
This scenario corresponds with growing sovereign borrowing costs in the area, putting further financial strain on nations with large financial requirements, according to the report.
The IMF emphasized that Iraq’s fiscal policies face challenges in controlling spending, redirecting subsidies, and enhancing fiscal sustainability within medium-term frameworks.