Iraq’s dollar reserves rebound to nearly $80 billion, central bank adviser says

BAGHDAD — Iraq’s dollar reserves have recovered to nearly $80 billion after falling to $73 billion, while gold holdings remain at 170 metric tons, Mahmoud Dagher, an adviser to the governor of the Central Bank of Iraq, said Tuesday.

Dagher told the state-run Iraqi News Agency that combined dollar reserves held in the central bank’s accounts and government accounts at the U.S. Federal Reserve increased. “Total dollar reserves… improved during September and October after falling to $73 billion. They have now returned to nearly $80 billion,” Dagher said. He added that Iraq’s gold reserves remained unchanged at 170 tons.

Dagher attributed the recovery in dollar reserves to oil export revenues of nearly $6 billion during the two months, describing the current level as acceptable under the prevailing economic conditions. “Iraq’s problem is its heavy reliance on oil as a source of public revenue and to finance government spending, particularly salaries,” he said.

Iraq’s oil exports have risen to more than 3.4 million barrels a day since the start of October, back to prewar levels, from an average of 3 million in September, Oil Minister Basim Mohammed Khudair al-Abadi said on Oct. 19.

He explained that Iraq’s reserves had previously been sufficient to cover one year of imports if oil exports stopped, as occurred during April, May and June. That coverage subsequently declined to approximately nine months but has begun recovering. “Reserves are not measured by their absolute value, but by their ability to support our foreign trade, because we depend heavily on imports,” Dagher said.

Oil exports fell from more than 99 million barrels in February to 18.6 million in March, cutting monthly revenue from more than $6.8 billion to about $1.95 billion. Oil provides more than 90% of government revenue. Foreign Minister Fuad Hussein said this month that the war had cost Iraq an estimated $60 billion.

He urged the Ministry of Finance to develop alternative revenue sources to reduce reliance on reserves, saying that using them to cover government financial needs was difficult and impractical.

On the availability of physical U.S. dollars, Dagher said Prime Minister Ali Al-Zaidi was personally monitoring the arrival of cash shipments, each carrying approximately $500 million. “Two aircraft carrying U.S. dollars have arrived, and further shipments will follow in the coming days, according to the prime minister’s statements,” he said.

Dagher reassured citizens that dollar banknotes remained available at the central bank. “Cash dollars are available at the central bank,” he said. However, Dagher warned that continued shipments depended on security conditions, noting that any outbreak of armed conflict or war could complicate the transportation of cash shipments worth approximately $500 million each.

Regarding Iraq’s decision to maintain most of its foreign currency reserves at the U.S. Federal Reserve, Dagher said the arrangement was based on technical considerations rather than political preferences. “There are unresolved legal cases abroad involving Iraqi state-owned banks,” he said, adding that resolving them could give Iraq additional options for depositing its reserves.

Dagher said Iraq also maintains reserves in financial centers across Europe, Basel, the United Arab Emirates and China, but the largest share remains at the U.S. Federal Reserve because of the protections it provides for Iraqi funds.

Iraq’s oil export revenues are held in an account at the Federal Reserve Bank of New York, from which the Central Bank of Iraq receives periodic shipments of physical U.S. currency to meet domestic cash demand. In April, the Trump administration suspended some dollar shipments as it pressed Baghdad to curb the influence of Iran-backed armed groups and tighten controls over illicit financial flows.