Iraq's looming budget cuts: what to expect if oil prices stay low

With Brent crude currently trading at $63 per barrel, well below the $70 benchmark used in Iraq’s 2023–2025 federal budget, pressure is building on Baghdad to revise its spending priorities. The original budget projected a 64 trillion IQD deficit, although as of November 2025, the actual deficit was just over 1 trillion IQD.

If oil prices remain at current levels or fall further, Baghdad will be forced to make difficult decisions to preserve liquidity. The government's overarching objective will be to ensure that it can continue paying public sector salaries and pensions, which alone exceed 73 trillion IQD annually. Here’s a breakdown of where cuts are most likely.