Iraq considers raising official dollar rate to 1,500 IQD and dropping currency zeros

Baghdad (IraqiNews.com) – Safaa Al-Jabri, member of parliament for the Al-Sadiqoun bloc and member of the Parliamentary Economic Committee, revealed that the federal government is reviewing a proposal to adjust Iraq’s official exchange rate from 1,310 dinars to 1,500 dinars per U.S. dollar, while advancing high-level deliberations to redenominate the national currency and potentially remove zeros. Speaking in a televised interview, Al-Jabri projected that sovereign state revenues for the 2027 federal budget will surpass $110 billion, declaring that Iraq has successfully weathered the acute economic fallout triggered by past disruptions at the Strait of Hormuz and Basra export halts. According to Al-Jabri, fiscal parameters for the upcoming national budget are being restructured on the back of rising non-oil customs and tax receipts, an unprecedented $8 billion to $10 billion generated from domestic petroleum sales, and projected crude oil export earnings exceeding $85 billion. He noted that Iraqi crude sales currently benchmark around $80 to $82 per barrel, generating approximately $5 billion in monthly export revenues, providing budgetary headroom as trade bottlenecks and logistics gradually normalize. Regarding currency and fiscal policy, Al-Jabri highlighted key government plans: Official Exchange Rate Revision: Leaked preliminary drafts of the federal budget proposal—which carries a planned deficit between 25 and 30 trillion dinars—contain a formal submission from the Minister of Finance proposing to adjust the official statutory exchange rate to 150,000 dinars per $100 (1,500 IQD per USD). Al-Jabri noted that no binding cabinet decision has been finalized to date. Currency Redenomination: Serious technical discussions are underway between the Prime Minister’s Office and the Central Bank of Iraq regarding currency redesign and the removal of three zeros. The measure is currently stalled only by legal jurisdictional reviews to identify the specific governing authority legally empowered to greenlight and execute the structural transition. Critique of Past Budget Frameworks: Al-Jabri criticized previous administrations for populist fiscal practices, claiming that state budgets were prepared through rote copy-paste mechanisms for nearly twenty years under former Finance Minister Taif Sami, who had risen through the ministry ranks from director general of budget to minister. Public Liabilities & Contract Terminations: The lawmaker highlighted structural financial arrears inherited by the treasury, including outstanding wheat procurement payouts owed to local farmers, unpaid rationing supply dues claimed by Al-Owais Company across 2025 and 2026, and 33 billion dinars in overdue liabilities tied to road and bridge construction. In response, Prime Minister Ali Faleh Al-Zaidi has canceled legacy public work contracts where execution progress remained below 20 percent. The potential devaluation of the official dinar to 1,500 IQD per dollar represents an effort to narrow the spread with the parallel currency market—which recently traded above 160,000 dinars per $100—while curbing the planned fiscal deficit for the 2027 fiscal cycle.