ERBIL, Kurdistan Region of Iraq – Iraq cut spending as a safety measure in light of fluctuating oil prices and increased expenditures, the prime minister’s advisor said on Wednesday, asserting that Baghdad is not facing a liquidity crisis. 

Prime Minister Mohammed Shia’ al-Sudani on Monday chaired an emergency Ministerial Economic Council meeting in Baghdad to address budget pressures and ordered cuts in non-priority government spending.

“These measures come in light of fluctuating oil prices and increased spending requirements,” Mazhar Mohammed Salih, financial advisor to Sudani, told state media. 

He stressed that Baghdad is “not expected” to face a severe liquidity crisis in the short term “as long as oil revenues remain at their current levels and coordination between fiscal and monetary policies continues.” 

Salih’s comments come as Iraq is expected to close 2025 without approving a federal budget and amid declining oil prices. Economists expect the 2026 budget to undergo restructuring in several spending areas, with the possibility of reducing investment projects due to financial challenges. 

Moeen al-Kadhimi, a member of the Iraqi parliament’s finance committee, told The New Region last week that the 2026 budget “will be difficult and complex.” 

After months of political wrangling, the Iraqi parliament passed a three-year budget for 2023, 2024, and 2025, in June 2023. The budget had an annual value of approximately $153 billion, the largest in the country’s history.