IMF Says Iraq Faces Rising Fiscal Pressures in 2026

BAGHDAD, Iraq — The International Monetary Fund projects Iraq will face greater fiscal difficulties in 2026 as energy subsidy costs rise, public debt increases and borrowing interest rates climb in external markets. Iraq is among countries where energy subsidies account for approximately 6 percent of gross domestic product. This makes the public budget more exposed to fluctuations in oil and gas prices. According to the IMF, Iraq is one of the economies where public debt has risen significantly compared with the pre-coronavirus period. Debt levels in 2026 are expected to increase noticeably compared with 2019, mirroring a regional trend seen in countries with large budget deficits. State borrowing costs across the region are also rising during this period, intensifying pressure on countries with high financing needs. The fund said Iraq's fiscal policies face challenges in controlling expenditures, redirecting subsidies and improving fiscal sustainability within medium-term frameworks.