Standard & Poor's, the international credit rating agency, maintained Iraq's credit rating at (B-/B), simultaneously removing the credit watch previously imposed on it. This decision was conveyed in the agency's report for June 2026, which affirmed that the Iraqi economy
is steadily progressing towards strengthening its financial sustainability, despite regional challenges. The agency anticipates that relatively higher average oil prices during 2026 will support the country's financial revenues and balance of payments. The report also indicated that an increase in oil
production during 2026 would provide crucial support for Iraq in navigating global price fluctuations and surrounding geopolitical tensions. The agency commended the Iraqi authorities' efforts in redirecting some oil export channels following recent events and expanding export routes after the
cabinet's approval. These steps are part of broader plans aimed at increasing oil exports and diversifying electricity and gas sources within the country, which has spurred investment in power plants and liquefied natural gas (LNG) projects during 2025. Furthermore, the agency
expects a gradual and sustained recovery in oil production and exports during the second half of the current year, forecasting a significant rise of approximately 13% in Iraq's real GDP in 2027. The report highlights that substantial international reserves, coupled
with liquid assets directly available to the government (estimated at about 11% of GDP, including foreign deposits), provide Iraq with financial flexibility. This flexibility encompasses the ability to meet its debt obligations in both local and foreign currencies on time
and in full. The agency also noted Iraq's financial resilience, projecting that the country will maintain average international reserves until 2029, thereby bolstering international confidence in Iraq's financial solvency.
