Iraq: Baghdad in crisis swallows bitter pill of devaluation

Issue 1117 - 07 Jan 2021

Iraq enters 2021 in the midst of its worst financial crisis of the post-Saddam Hussein period. There is no sign that policy-makers are prepared to take the measures needed to redress a situation that has forced one of the world’s largest oil exporters to substantially devalue its currency. Public sector salaries and pensions are costing $5bn a month, about $1.5bn more than the government has been earning from its crude oil exports. That has forced Baghdad to burn through its foreign currency reserves at an accelerated pace, printing money to fund loans to cover salaries and other costs.

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