BAGHDAD, Iraq - The Iraqi parliament’s finance committee on Sunday said it has completed a draft for a domestic and foreign borrowing bill as the closure of the Strait of Hormuz amid the US-Iran war has taken a toll on the country’s economy. 

Uday Awad Kadhim, head of the parliament’s finance committee, told The New Region that “due to the closure of the Strait of Hormuz, export levels have stopped, and the government has no option other than borrowing available to it.”

As a means in its war against the US and Israel, Iran has shut the Strait of Hormuz, a key waterway responsible for the transport of roughly 20 percent of the world’s oil, sharply driving up global oil prices. 

Iraq exported only 18.6 million barrels of crude oil in March, compared to 99.8 million barrels in February, before the conflict erupted, resulting in nearly $4 billion in lost revenue. The closure of the Strait of Hormux has thus significantly affected Baghdad’s ability to pay public sector salaries. 

During Iraqi Prime Minister Ali al-Zaidi’s recent visit to Washington, US Special Presidential Envoy to Iraq Tom Barrack said his vision for the region will “make the Strait of Hormuz an afterthought in two years.

“According to estimates made in the first 10 days of this month [July], the Iraqi government has only been able to collect 35% of the revenue needed for its total expenditures,” Rebwar Karim, another member of the finance committee, told The New Region.

Ikhlas al-Dulaimi, also on the committee, told The New Region that Zaidi has received a grant from the US during his Washington visit and that meanwhile, the committee is working towards determining how much is needed for salaries and other budgets.

“This year the Iraqi government will not have a budget, so toward the end of this year — specifically in October — they will be working on the 2027 budget bill,” Dulaimi added.

The regional turmoil has forced Iraq to explore northern routes in a scramble to sell more oil, such as Turkey’s Ceyhan port. It has also compelled Baghdad to explore land routes westward through Syria.

In April, Iraqi officials warned that delays in approving the 2026 federal budget could harm the country’s economy, with Zaidi’s finance secretary advisor saying Iraq’s heavy reliance on public spending makes the economy particularly vulnerable to budget delays.

Zaidi arrived in the US on Monday for a week-long visit that saw him meet US President Donald Trump in the White House, in addition to conducting talks with myriad US companies in a bid to bolster Iraq's economy with foreign direct investment.