Iraq’s money supply expanded sharply in the first five months of 2026, with currency issuance rising 13.8% to reach approximately 113.56 trillion Iraqi dinars (about $86 billion) by the end of May.
The surge in domestic liquidity comes as the Central Bank of Iraq faces mounting pressure to manage fiscal outflows amid a contracting balance sheet.
4 billion during the same period, marking a significant erosion of the liquidity buffer that typically underpins the dinar’s stability.
The expansion of the monetary base stands in stark contrast to the central bank’s external position.
Iraq’s foreign currency reserves fell by $7.4 billion during the same period, marking a significant erosion of the liquidity buffer that typically underpins the dinar’s stability.
This divergence suggests that domestic spending and subsidy obligations are being met through domestic money creation rather than fresh foreign inflows.
The data underscores the structural challenges facing Iraq’s economy.