Iraq posts 36.26 trillion dinar deficit as oil revenue halves

Summary

• Iraq recorded a 36.26 trillion dinar fiscal deficit in the first nine months of 2026.
• Oil revenue fell 50.8% year-on-year, covering 76% of total government income.
• Salaries and social welfare absorb most spending, tightening pressure on Baghdad's payroll capacity.

The latest

Iraq's fiscal deficit reached 36.26 trillion dinars in the first nine months of 2026, according to an Accounting Department report from the Ministry of Finance cited by QNA. Oil revenue over the period dropped 50.8% from a year earlier. Total income covered only about 59% of what the government spent through the end of September.

Details

• The spending side: Government outlays totaled roughly 89.08 trillion dinars through the end of September, the ministry report said, against total revenue of 52.82 trillion dinars. The gap between the two lines produced the 36.26 trillion dinar shortfall recorded for the nine-month period.
• Operating vs investment: Operating expenditure accounted for 85.68 trillion dinars, or 96.2% of all spending, according to the report. Investment spending came to just 3.40 trillion dinars, or 3.8%, leaving capital projects with a fraction of what recurring obligations consumed.
• Payroll first: Public sector salaries topped the expenditure list at 46.13 trillion dinars, the report showed, a single line that alone exceeds half of total government spending for the nine months and dwarfs all non-oil revenue collected over the same period.
• Welfare and debt: Social welfare allocations came second at about 20.57 trillion dinars, according to the ministry figures. Services and loan interest payments together reached 7.95 trillion dinars, completing the bulk of the operating bill alongside salaries.
• Where income comes from: Oil receipts delivered 40.20 trillion dinars, or 76% of total revenue, the report said. Non-oil revenue contributed 12.62 trillion dinars, or 24%, leaving the budget still overwhelmingly tied to crude earnings despite the year's decline.
• The oil collapse: Oil revenue fell from 81.75 trillion dinars in the same period of 2025 to 40.20 trillion dinars this year, according to the report. That drop accounts for the overwhelming share of the revenue loss recorded across the nine months.
• Total revenue down: Overall government income fell 42.5% year-on-year, the report said, from 91.85 trillion dinars in the first nine months of 2025 to 52.82 trillion dinars this year. The decline hit both the oil and non-oil sides of the ledger.
• Deficit comparison: The shortfall stood at 8.13 trillion dinars over the same nine months of 2025, against 36.26 trillion dinars now, the clearest measure in the ministry's figures of how fast the fiscal position deteriorated.
• What is not stated: The ministry does not set out how the deficit is being financed, nor whether borrowing, reserves or arrears are covering the gap. No projection for the final quarter of 2026 is included in the figures released.

Background

Iraq's federal budget has long rested on crude exports, with oil receipts historically supplying the large majority of state revenue. Public salaries and social allocations form the bulk of recurring commitments, leaving limited room to absorb a sharp fall in oil income without borrowing or spending cuts.

Between the lines

With operating costs at 96.2% of spending and salaries alone at 46.13 trillion dinars, the expenditure side is structurally difficult to compress quickly. Non-oil revenue of 12.62 trillion dinars covers only a fraction of the payroll line, so a revenue shock concentrated in oil — down from 81.75 to 40.20 trillion dinars — transmits almost directly into the deficit rather than being absorbed elsewhere.

What's next

Watch for the Ministry of Finance's full-year 2026 accounting report, any announcement on how the shortfall is financed, and the government's 2027 budget assumptions on oil prices and public sector wages.

Source: QNA (Qatar News Agency), citing the Accounting Department of Iraq's Ministry of Finance