Iraq is more dependent on oil income than any other Gulf nation. Because of lower oil prices and lower oil demand the Iraqi GDP shrank eleven ten percent in 2020. The monthly government payroll is $4.5 billion and in 2020 oil income has only been able to cover about half of that. Much of the payroll spending is stolen and the government is under a lot of pressure to save money by making a serious effort to shut down the scams that steal as much as a third of the payroll costs. For most of 2020 the government was able borrow money to cover the monthly budget shortfall. But by late 2020 that the government was out of credit and millions of Iraqis were not getting paid on time. The situation improved a bit at the end of the year when oil price in December reached $48 a barrel.
The 2021 government budget avoided major spending reductions or reducing corruption and mainly depends on higher ($60 a barrel would be nice) oil prices to work. For too many Iraqi politicians that is seen as a more realistic solution than taking on the corruption problems involving who gets paid what by the government. Because of the continued corruption and deficit spending, recovery from the recession will take longer. GDP is expected to grow by 1.2 percent in 2021 and about four percent in 2022 and 2024. Before covid19 (2019) GDP was growing at 4.5 percent a year. The continued reluctance of government officials to deal with the corruption means the popular protests will continue.
Dealing with problems involving Iran or Turkey are also being avoided. Iranian sponsored violence in Iraq or interference in the economy are opposed by most Iraqis. This does not motivate Iraqi politicians to act and that is causing more and more popular discontent. That’s fine with Iran because a government collapse would provide Iran with more opportunities to expand it control in Iraq.