Baghdad: The financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed on Saturday that Iraq’s foreign reserves are still within relatively safe levels, noting the importance of monitoring this trend and maintaining the safety margin.

According to Iraqi News Agency, Saleh highlighted that the International Monetary Fund has estimated Iraq’s total reserves to reach approximately $79.2 billion by 2026, as per its 2025 projections. This amount corresponds to about 9.6 months of imports of goods and services, indicating that Iraq’s foreign reserves are currently nearing this benchmark.

Saleh explained that covering more than six months of imports is considered a relatively safe level according to the reserves efficiency index. However, he noted that the decline recorded in reserves during the current year necessitates increased caution and monitoring. This is not because the reserves have reached a critical level, but due to concerns that the downward trend might persist, potentially reducing the safety margin in the future.

He further elaborated that foreign reserves play a crucial role in supporting the stability of the Iraqi dinar exchange rate. They act as the main line of defense against currency pressures, enabling the Central Bank to provide dollars and satisfy legitimate demand. This contributes to protecting stability and fostering overall growth.

Saleh also pointed out that heavy reliance on oil revenues poses a significant risk. Any decrease in oil revenues could lead to a decline in government revenues and foreign currency inflows, possibly increasing pressure on reserves and exchange rate stability.

He emphasized the importance of maintaining the central bank’s monetary policy independence and avoiding the continuous use of foreign reserves or monetary financing to address budget deficits. Such practices could deplete reserves and elevate inflationary and monetary pressures.

Saleh concluded by stating that the sustainable solution lies in controlling government spending, particularly current expenditures, enhancing non-oil revenues, and utilizing monetary policy tools to manage liquidity and maintain monetary stability. Iraq’s monetary situation is relatively reassuring and secure at present, but the continuous decline in reserves necessitates caution. The sustainability of this situation depends on economic policy, public finance reform, and reducing dependence on oil.