Iraq considers deleting zeros from dinar as officials revive currency overhaul

Iraq is revisiting the idea of deleting two zeros from its currency, the dinar, as the nation grapples with an escalating budget crisis. The plan is currently under discussion within the Central Bank of Iraq, though it has not yet progressed to a formal proposal or parliamentary debate, according to Ahmed Rasheed, a member of the Parliamentary finance committee.

The latest discussions stem from the worsening budgetary situation exacerbated by the closure of the Strait of Hormuz, which has disrupted Iraq's primary oil export pathway. Global oil prices have become volatile, resulting in a significant drop in government revenues from $6.8 billion in February to approximately $2.3 billion in May and June.

Iraq's monthly expenditures on salaries, pensions, and social welfare amount to around $6.5 billion. Rasheed highlighted the main objectives of the currency overhaul: restoring the dinar's real value and retrieving cash that remains unaccounted for in the banking system. Currently, approximately 70 trillion Iraqi dinars are unaccounted for, making up 70% of the total 125 trillion dinars in circulation.

The minister cautioned that no specific timeline has been established for the implementation of the project. In a separate interview, Mustafa Sanad, the Minister of Communications, indicated that the government had already decided to proceed with the currency reform. He estimated that around 8 trillion dinars in undeclared cash might need to be handed over to the government. Sanad suggested a gradual rollout, potentially beginning in 2027 and extending over several years.