October 30, 2026
The International Monetary Fund began official talks with the Iraqi authorities in preparation for preparing a new lending program, in light of severe financial pressures exacerbated by the war on Iran and the disruption of navigation through the Strait of Hormuz, through which most Iraqi energy exports pass.
The Fund announced, on Thursday, that the discussions aim to determine Baghdad’s priorities and ways to address weaknesses in the Iraqi economy, in response to a request submitted by the Iraqi government for a new support program.
In a press conference held by the Fund in Washington, the official spokeswoman, Julie Kozak, explained that the Foundation will work to understand the needs of the Iraqi authorities in a deeper way before determining the best mechanism to support them through a financing program.
Kozak noted that Iraq was facing severe financing restrictions even before the outbreak of war, pointing out that the narrow non-oil revenue base constitutes an additional burden and increases the pressure on state finances.
In the same context, the International Monetary Fund expected, in a report issued this month, that the Iraqi economy would shrink by 16% during the current year, according to what was reported by Agence France-Presse.
The Iraqi economy, which depends primarily on energy exports, has been severely affected by the almost complete restrictions imposed by Iran on navigation in the Strait of Hormuz since the outbreak of the conflict on February 28, coinciding with the imposition of a US blockade on Iranian ports.
It is noteworthy that the last financing program that brought Iraq together with the International Monetary Fund ended in 2019, while Baghdad has financial obligations to the institution represented by interest payments worth about 428 million dollars until 2030.
The Director-General of the International Monetary Fund, Kristalina Georgieva, revealed Baghdad’s request for new support during the annual meetings held in Bangkok this month, warning at the same time that the most fragile economies are suffering losses and serious damage as a result of regional conflicts, despite the relative resilience of global growth.
