CBI expected to hit $500M in daily dollar sales as spending soars

Shafaq News/ The Central Bank of Iraq (CBI) daily sales are expected to approach $500 million due to rising government spending, the Iraq Future Foundation for economic studies and consultancy said on Friday.

The foundation's head, Manar Al-Obaidy, stated, "In 2024, the Iraqi government's average monthly spending reached approximately 12 trillion dinars. With the addition of loans and advances received by government agencies and ministries, estimated at around 2 trillion dinars monthly, the total government expenditure amounts to 14 trillion dinars per month."

The government, he said, typically operates for 20 days a month, meaning daily expenditure is approximately 700 billion dinars. “To cover this spending, the Ministry of Finance needs to sell at least $400 million daily to the CBI to ensure it provides the necessary liquidity to cover government expenses,” he explained.

The Central Bank can reportedly provide the Iraqi dinar required by the ministry only by selling an equivalent amount of dollars. As a result, the bank's dollar sales are directly linked to the increase in government spending. "The higher the spending, the greater the CBI's need to sell more dollars," Al-Obaidy clarified.

"If this trend continues, daily market sales could reach between $400 and $500 million through various mechanisms employed by the bank, reflecting the direct impact of rising public expenditure on the currency market," he added.

The focus, according to the foundation's head, should not be on daily dollar sales rates but on the daily spending rates driving the increase in dollar sales.

**1 USD = about 1.3k IQD