Baghdad devalues the dinar to 1,520 and draws its loudest objections from inside the cabinet

The new structure sets the dinar at 1,520 to the dollar, down from the 1,320 rate that had held since February 2023, with banks, financial institutions and exchange offices selling to the public at the new level. Reuters reported the decision on 7 October, citing a Council of Ministers decision and a Finance Ministry statement; the Central Bank of Iraq confirmed it in a statement on 8 October, putting the adjustment at roughly 15 per cent against Reuters' 14.5. The sequencing is worth fixing: Al Jazeera dates the cabinet approval to Tuesday 6 October, Shafaq News says the rate took effect on Wednesday, and the CBI statement followed on Thursday. The Bank framed the move as support for domestic industry, improved competitiveness against imports, investment in non-oil productive sectors and employment in small and medium enterprises.

The fiscal context is less decorative. Finance Ministry data reported by Shafaq News around 5 October put the deficit through end-July 2026 at 26.329 trillion dinars, about $20.16 billion, with oil supplying nearly four-fifths of state income; the comparable figure through September 2025 was 17.7 trillion dinars. Iraq has passed no federal budget law for 2026 at all. AGBI, writing on 7 October, described the mechanism plainly — more dinars per dollar of oil revenue, helping Baghdad meet domestic spending commitments — and expects consumer prices to rise. Shafaq’s 8 October analysis traces the revenue squeeze to the resumption of the US war with Iran and to spending promises made in Baghdad’s coalition bargaining, and reports backlash from blocs inside the cabinet, not only from opposition benches.

A parliamentary Finance Committee member, Abbas Hayal, told Shafaq on 6 October that the 2027 draft budget sets spending at 217 trillion dinars, about $164.9 billion, with a projected deficit of 50 trillion dinars, roughly $38 billion. That is one MP’s account of an unpublished document, not a ministry text, and should be read as such. A second committee member, Jamal Kocher, told Shafaq in September that the Finance Ministry planned to send the bill to parliament on 15 October — five days from now, and the next hard test of whether Prime Minister Ali al-Zaidi’s government can legislate a budget at all after a full year without one.

Assessment: The industrial-policy language in the CBI statement is the part to discount. A devaluation announced in the same month as a budget submission, against a $20 billion deficit and no budget law, is a revenue instrument: it converts the same barrels into more dinars for the same payroll. Two consequences nobody has yet written through. First, every federal transfer to Erbil is now worth about 15 per cent less in dollars, which lands directly on the Kurdistan salary file. Second, the political test is not whether MPs issue calls — they have — but whether any Coordination Framework component formally breaks with al-Zaidi. Cabinet-internal objection, if Shafaq has it right, is the more dangerous signal.