Iraq may seek external borrowing if liquidity crisis persists, PM adviser says

BAGHDAD, Iraq — Mazhar Mohammed Salih, financial adviser to Prime Minister Mohammed Shia' al-Sudani, said geopolitical tensions around the Strait of Hormuz have hit Iraq's economy despite its non-belligerent status, noting that more than 90% of Iraqi oil exports pass through the waterway. Salih said Iraq has simultaneously faced a fiscal deficit and a cash squeeze in recent months. The government has been working to maintain salary, pension and social protection payments that support roughly 10 million Iraqis, he added. He described the agreement to reopen the Iraq-Turkey pipeline via Ceyhan as an important safeguard, while noting that export routes through Ceyhan, Aqaba and Banias have been suspended for years on geopolitical grounds. Salih said Iraq's economy has been shielded by central bank reserves exceeding $100 billion, with inflation running at around 4.5%. Salih added that Iraq's OPEC quota does not reflect its actual production capacity and that output losses of close to 2 million barrels per day have accumulated in recent years. He said Iraq can manage the crisis if the conflict ends by year-end, but that external borrowing could be used to support public finances if liquidity remains tight.