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The road map classifies Iraq as an unusual Category 2 sovereign. Its fiscal and external pillars read like Category 1: debt below 60% of GDP, interest at about a tenth of revenue, reserves covering roughly eleven months of imports and a current account near balance. Its governance, diversification and financial pillars read like Category 3. Political Stability sits at the 2nd percentile, oil accounts for 91% of exports, state banks hold 79% of credit and non-performing loans are around 17%.
The paper argues that the strong ratios come mechanically from USD 110–120 bn a year of crude receipts, and that they reverse as soon as the receipts stop. The 2026 closure of the Strait of Hormuz showed this. First-half revenue fell 42%, no 2026 budget was passed, the central bank printed IQD 25 trillion, reserves fell USD 16 bn from their peak and the parallel-market spread widened to 17%. The budget balances at USD 84–86 a barrel, and wages and pensions absorb 22–24% of GDP.
The paper's central task for Iraq is to stop a strong balance sheet being consumed by a weak state. The aim is to turn a temporary hydrocarbon surplus into permanent fiscal, institutional and financial capacity before the buffer is spent.
Key findings
- Year 1: complete the cabinet, pass the 2027 budget on time, enforce disarmament of non-state armed groups, legislate a central-bank law that bans printing to cover Treasury shortfalls, adopt a fiscal rule and open IMF negotiations.
- Non-oil revenue is to double from under 5% to 10% of GDP through VAT, excises and customs enforcement worth about 2.7% of non-oil GDP, plus property tax.
- A hiring freeze, a biometric payroll audit and parametric pension reform are meant to cut wages and pensions to 18% of GDP or less, without nominal pay cuts.
- The fiscal break-even oil price is to fall below USD 65, with revenue above a USD 60 reference price ring-fenced in a stabilisation fund.
- Export routes that avoid Hormuz are prioritised: Kirkuk–Ceyhan toward 770 kb/d, the Basra–Aqaba and Kirkuk–Baniyas options, and the Grand Faw port and Development Road corridor.
- Market re-entry, with a USD 1 bn seven-year benchmark at under 9%, follows only after a governance gain of about 30 percentile points and an IMF arrangement.
Summary of the paper; the full analysis is in the PDF.