Oil revenues in Iraq topped US$115 billion in 2022

A depreciating currency and political uncertainty are risks to monitor this year

Further plunges in the Iraqi currency will continue to drive soaring prices for goods—particularly gas and wheat—with purchasing power weakening across middle- and lower-income consumer groups. Limited access to foreign currency, coupled with the high risk of protests, will disrupt B2C and B2B demand. However, heightened oil revenues will drive some B2G growth, particularly as Iraq seeks to increase investments in its oil sector. Businesses should engage closely with the government to win the scarce new tenders coming up.


After a tumultuous 2022, Iraq begins the year with a slightly more optimistic outlook, but various risks remain. The value of the Iraqi dinar has continued to plummet against the US dollar, with one USD trading at around IQD 1,700 on the black market. The depreciation follows measures taken by the US Federal Reserve to blacklist a number of Iraqi banks that deal with Iran, leading to dollar shortages in the Iraqi market. A fluctuating currency presents a challenge to Iraq’s 2023 budget, which has yet to be released. After amassing more than US$ 115 billion in oil export revenues last year, the 2023 budget is expected to be Iraq’s largest yet, with high oil prices boosting the country’s finances. 

Our View

Despite authorities’ measures to stabilize the exchange rate, such as replacing the central bank governor, the Iraqi dinar will continue to weaken against the dollar in the short term. We continue to have a downward revision bias as FX pressures mount due to market rate depreciation. Subsequently, renewed protests will become increasingly likely, as further depreciation fuels public discontent. The approval of a much needed 2023 budget will drive some project activity following a year of muted growth, but political wrangling and the expansion of the already-bloated public sector pose risks to economic reform. Alongside this, Muqtada al-Sadr has returned to Iraq’s political scene following months of silence, at a time when the Coordination Framework continues to have a growing presence in Iraqi politics. As such, civil unrest and growing political tensions will continue to be a risk in 2023.

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