Iraq’s budget performance in the first quarter of 2025 reveals important economic challenges. While government spending increased by 12%, revenues dropped by 12.7%. This imbalance highlights growing pressure on the country’s finances.
According to the Federal Ministry of Finance, Iraq spent 28 trillion Iraqi dinars during the first three months of the year. Notably, 80% of this spending went toward salaries and wages. Compared to the same period last year, spending rose by 12%.
Meanwhile, revenues fell to 27.2 trillion dinars, with oil income making up 91% of this total. This amount represents a 12.7% decline from the previous year’s first quarter. As a result, the gap between spending and revenues reached nearly 900 billion dinars.
The Finance Ministry’s report details expenses from December through February. Of the total expenditure, 26.6 trillion dinars supported operational costs, while about 1.5 trillion dinars covered investments. Operational spending accounted for 94.7% of total expenses.
Salaries and social welfare benefits consumed the largest share, totaling over 22.6 trillion dinars—about 80.4% of all spending. Among government bodies, the Federal Finance Ministry had the highest expenses, spending 6.7 trillion dinars. The Interior Ministry ranked second with 3.3 trillion dinars in expenditures.
Comparing to the first quarter of 2024, spending increased by 3 trillion dinars. Last year, expenses totaled 25 trillion dinars in the same period, marking a 12.2% rise this year. However, investment spending decreased by 420 billion dinars, a 2.3% drop.
In the Kurdistan Region, spending rose by 1.6 trillion dinars, mostly on salaries. This represents an 83.3% increase compared to the previous year.
On the revenue side, oil income made up 91% of all earnings, totaling nearly 25 trillion dinars. Non-oil revenues accounted for just 9%. Compared to the first quarter of 2024, revenues dropped by almost 3 trillion dinars, a 12.7% decline.
Experts attribute this revenue shortfall primarily to falling oil prices. Dr. Nabil Masoumi, an Iraqi economic analyst, explained that average oil prices declined from $76 per barrel last year to $72 this year during the first quarter.
Overall, Iraq’s budget performance shows increased spending paired with shrinking revenues. The nearly 900 billion dinar deficit underscores the need for careful fiscal management in the coming months.
