Iraq's PM-designate confronts worst fiscal crisis in decade after Iran war oil shock

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Baghdad:Iraq’s Prime Minister-designate Ali Al Zaidi is currently confronting the nation's most severe fiscal crisis in over a decade, triggered by the catastrophic economic ripples of the Iran-Israel war and a subsequent global oil shock. 

As Baghdad relies almost exclusively on crude oil for national revenue, the dramatic price volatility and disrupted supply chains have left the incoming administration with a crumbling budget and few avenues for immediate recovery.

 This conflict has not only destabilized regional security but has sent Iraq’s energy-dependent economy into a tailspin, directly threatening the stability of the public sector.

With the national ‘war chest’ dwindling, the new leadership must navigate a landscape of rising debt and potential austerity measures to prevent a total financial meltdown. Compounding this emergency is the urgent need to maintain essential services and civil service salaries while addressing a massive deficit that has widened significantly since the outbreak of hostilities. 

International analysts warn that without immediate structural reforms, Iraq faces a prolonged period of economic contraction and heightened internal pressure.

Photo Credits: AFP