Iraq: Al-Zaidi orders $2.67B support package as deficit tops $20B

Summary

• Iraq's prime minister ordered five measures worth at least 3.5 trillion dinars, his office said
• Finance Ministry data showed a 26.329 trillion dinar deficit through July 2026
• The package is among the new government's first fiscal moves after the premiership deadlock ended

The latest

Iraq will channel at least 3.5 trillion dinars, roughly $2.67 billion, into housing, industry, contractors, farmers and its sovereign fund under an order from Prime Minister Ali Al-Zaidi, his office said in a statement reported by Shafaq News. The spending lands against a deficit the Finance Ministry put at 26.329 trillion dinars, about $20.16 billion, through July 2026.

Details

• The housing tranche: The largest single allocation is 1 trillion dinars, about $763 million, directed to housing and real estate. The statement said the money will be redirected from existing Central Bank of Iraq initiatives rather than drawn as fresh budget spending, making it a reallocation of facilities already on the central bank's books.
• Industrial financing: A second 1 trillion dinars, also about $763 million, goes to the Trade Bank of Iraq and the Industrial Bank as additional liquidity for industrial lending. The statement did not set out which sectors or project sizes the two state banks should prioritize.
• Contractors and farmers: Two further allocations of 500 billion dinars each, about $382 million apiece, cover payments owed to contractors and support for farmers. Arrears to contractors have been a recurring pressure point for Iraqi governments, and the statement did not specify which outstanding claims the money settles first.
• The sovereign fund: A fifth tranche of 500 billion dinars, roughly $382 million, is added to the Future Generations Fund, Iraq's vehicle for setting aside oil income for later use. It is the only element of the five that accumulates savings rather than disbursing money into the economy now.
• The fiscal backdrop: Finance Ministry figures cited by Shafaq News showed expenditures substantially exceeding revenues through July 2026, producing a 26.329 trillion dinar gap, about $20.16 billion. The deficit is close to eight times the headline value of the package Al-Zaidi has just ordered.
• The political context: Al-Zaidi was asked to form a government after major political blocs reached an agreement ending a deadlock over the premiership. His office presented the five measures as one of the new government's early fiscal initiatives, a signal of priorities in its opening weeks.
• The scale question: At roughly $2.67 billion, the package is a fraction of the shortfall recorded in the first seven months of 2026, and two of the five measures, the housing tranche and the sovereign fund addition, do not represent new injections of budget money into current spending.
• What was not set out: The statement attached no disbursement timetable to any of the five measures, and did not name the ministries or agencies responsible for executing them. It also did not indicate whether the non-housing allocations require separate parliamentary or budget authorization.

Background

Iraq's budget depends heavily on oil revenue, leaving spending plans exposed to price swings. The Future Generations Fund was created to hold a share of that income for future use rather than immediate expenditure.

Between the lines

The composition of the package matters as much as its headline value. With the housing tranche redirected from existing central bank initiatives and 500 billion dinars parked in the Future Generations Fund, the sum entering the economy as new spending is smaller than $2.67 billion suggests. Against a deficit of 26.329 trillion dinars, the measures read as targeted relief for specific constituencies rather than a fiscal correction.

What's next

Watch for implementation instructions naming the ministries and timelines, the Trade Bank of Iraq and Industrial Bank lending terms, and Finance Ministry data extending the deficit figure beyond July 2026.

Source: Shafaq News