Why has Iraq devalued its currency, and why are some MPs against it?
Summary
Iraq has lowered the value of its currency, the dinar, after approving a budget with a large deficit caused by lost oil revenue due to disruptions from the war in Iran. The decision aims to help government finances but has caused concern among some members of parliament (MPs) who worry it will increase living costs for people.Key Facts
- Iraq’s government approved a budget for 2027 with a large deficit of about $30 billion.
- The dinar was devalued from 1,320 to 1,520 per US dollar to match budget needs.
- Oil exports have dropped significantly due to the war in Iran and disruptions through the Strait of Hormuz.
- Oil revenue pays over 90% of Iraq’s federal budget, so the drop caused financial strain.
- The Central Bank of Iraq called the devaluation a "strategic step" to improve finances.
- Some MPs oppose the move, saying it raises costs for everyday items and hurts poor people.
- MPs say they were not consulted before the decision and want more transparency.
- Iraq depends heavily on imports, so a weaker dinar means higher prices for food, medicine, and industry supplies.
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