#Iraq should probably reign in the Dollar spend for a while.

Iraq’s Government spending in 2024 was estimated at 14 trillion Iraqi dinars per month, which equates to 466 billion IQD ($345 million approx.) spent daily.

To meet this demand, Iraq sells dollars. The Iraqi Ministry of Finance needs dinars to cover its spending, but revenues from oil exports, trade, and other sources are primarily in US dollars.

To convert these dollars into the dinars required for spending, the Ministry of Finance sells dollars to the Central Bank of Iraq (CBI). The CBI then provides the Ministry with the needed dinars by "injecting" local currency into the market.

Government spending has now reached levels that require daily dollar sales of $400–$500 million! The more the government spends, the higher the demand for dinars, leading to greater dollar sales by the CBI.

As the CBI increases dollar sales to meet demand, it impacts the currency exchange rate. A surge in dollar sales can either stabilise or put pressure on the dinar, depending on market dynamics.

Unlike the USA, Iraq cannot print dollars out of thin air, its supply is finite. Selling large amounts of dollars daily at a rate more than it earns will deplete Iraq’s foreign currency reserves, which are essential for maintaining economic stability.

The ability to maintain high reserves depends heavily on oil prices.

This increasing reliance on dollar sales is risky. Without stable oil prices, economic growth, or revenue diversification, Iraq’s economy faces vulnerabilities.

President Trump now looks to both lower oil prices use tariffs and apply sanctions, if applied similarly to those in Iran, Iraq could soon face considerable challenges.

Iraq is seen as a conduit for money to the Iranian regime, and an enabler of the resistance axis, with the possibility of the Trump administration targeting individuals and entities involved in the movement of Iranian oil and gas, as well as financial and logistical networks facilitating these activities, we could see actions that implemented in quick time that have far reaching implications for Iraq’s fragile economy.

Probably a good time to reign in the spending and wait to see what surprises the Trump team has for the World.