ERBIL, Kurdistan Region - Experts and officials in Iraq’s economic and financial sectors have warned of the costly consequences of delays in approving the 2026 budget, as political deadlock over government formation persists.
Mudher Mohammed Salih, the Iraqi premier's financial advisor, told state media on Saturday that the delay is having severe effects “in an economy heavily dependent on government spending,” which he said accounts for around 50 percent of gross domestic product (GDP) and serves as the “primary engine of growth.” Salih added that delays in approving the budget “acts as a recessionary force,” affecting both the public and private sectors and creating a “prolonged state of uncertainty."
Since November’s parliamentary elections, Iraq has struggled to form a government. President Nizar Amedi was only elected in mid-April, while a prime minister has yet to be appointed. The ongoing political deadlock has stalled legislative work, including the budget.
Once a cabinet is formed, the new prime minister and finance ministry would need to review, adjust, and formally submit the draft 2026 budget to parliament. The finance committee would then require weeks to debate, amend, and negotiate allocations before a final vote.
The situation is further complicated by Iran’s closure of the Strait of Hormuz since March 8, in response to the United States and Israel’s military campaign against it, significantly impacting Iraq’s oil exports, as 90 percent of the country’s oil exports typically pass through the waterway.