The Effect of Oil Price Decrease on the Fiscal and Monetary Policies in Iraq


The objective of this research is to explain the effects of the big decreasing in the oil price in 2015 on the fiscal and monetary policies, as the oil return is the main source of Iraqi national income and may be the only source of international leader currencies & other reserve. That affects the main macroeconomics factors like public revenue and expenses, employment level, general price index and exchange rate of Iraqi dinar & its purchasing power. The main negative impact of the dependency oil revenue is the weakness of productive (non extractive) sectors sharing in the GDP, specially after 2003. One of research results is the inability to handle the deficit in the government balance sheet because of the supply surplus in keep the stability in the dinar exchange rate for long time with the managed floating policy. The research main recommendations are to get rid of the dependence on the oil revenue, develop the industry and agriculture sectors and also the tax system to have alternative source of funds to the government balance. That all must connected with combat of financial & managerial corruption