Iraq is at a critical point in its economic journey. The country faces serious challenges due to its heavy reliance on oil revenues. Fluctuating oil prices and geopolitical risks highlight the urgent need for more diverse income.

As Iraq looks to strengthen its economy, non-oil revenues could provide a vital opportunity. Led by Prime Minister Mohammed Shiaa Al-Sudani, there is a growing focus on using modern technologies and automation to improve revenue systems. This significant change aims to boost efficiency and transparency, paving the way for sustainable economic growth.

By adopting digital systems, Iraq can build a stronger and more varied income base, ensuring a brighter future beyond oil dependence.

Iraq’s Strategies to Enhance Non-Oil Revenues

As of August 2025, Iraq has been actively implementing strategies to enhance its non-oil revenues, recognizing the need to diversify its economy amid fluctuating oil prices.

Government Initiatives to Boost Non-Oil Revenues

On August 20, 2025, Prime Minister Mohammed Shiaa Al-Sudani chaired a meeting focused on increasing Iraq’s non-oil revenues and strengthening state finances. The discussions emphasized deploying modern technologies, digital systems, and automation to improve revenue collection and efficiency. Al-Sudani highlighted the importance of optimizing investments in high-return areas and rationalizing spending to reduce waste. The meeting also addressed enhancing revenues from the Ministry of Trade, improving the Public Distribution System (PDS) food basket, managing wheat procurement and storage, and increasing revenues from Baghdad Municipality through better property and project management. Iraq Moves to Boost Non-Oil Revenues

Growth in Tax Revenues

In August 2024, Iraq reported a 22% increase in tax revenues compared to the same period in the previous year. This growth was attributed to the implementation of various government reform measures aimed at broadening the tax base and improving tax compliance. Prime Minister Al-Sudani emphasized that tax reform is a strategic necessity for Iraq’s non-oil economy and should not be viewed merely as a fallback during periods of oil revenue fluctuations. Iraq Sees 22% Growth in Tax Revenues

International Monetary Fund (IMF) Recommendations

In May 2025, the IMF highlighted the need for Iraq to diversify its revenue sources and reduce dependence on oil. The IMF recommended reviewing current and capital spending plans, limiting or postponing non-essential expenditures, and increasing non-oil revenues by revising customs duties and introducing or raising excise taxes. The report also suggested comprehensive wage bill reforms and improvements in tax administration to enhance fiscal sustainability. IMF publishes Iraq Recommendations

Development Road Project

Iraq has been investing in infrastructure projects to boost non-oil revenues. The Development Road project, a 1,200-kilometer railway and highway network connecting the Great Faw Port to the Turkish border, is expected to be completed by 2025 at an estimated cost of $17 billion. This project aims to enhance trade and connectivity, potentially increasing non-oil revenues through transit fees and related economic activities. Development Road

Iraq Development Fund

Established in August 2023, the Iraq Development Fund focuses on creating an optimal investment environment and developing the country’s non-oil economic resources. By February 2025, the fund had successfully attracted $7 billion in foreign direct investments, indicating progress in diversifying Iraq’s economy. Development Fund (Iraq)

These initiatives reflect Iraq’s concerted efforts to strengthen its non-oil revenue streams and build a more resilient economy.

Additionally, Iraq has been actively pursuing strategies to diversify its economy and reduce reliance on oil revenues. Recent data indicates a positive trajectory in the non-oil sector, with a 6% annual growth rate achieved by August 2025. This growth is attributed to advancements in industry, agriculture, and the digital economy, fostering a conducive investment environment. Iraq’s non-oil economy achieves 6% growth – Iraqi News

Additional Initiatives

• Five-Year Development Plan (2024–2028): Unveiled in August 2025, this strategy aims to reduce unemployment from 13% to 10% and achieve an annual economic growth rate of 4.24%. A key objective is to decrease the oil sector’s contribution to GDP by up to 25% during this period, emphasizing the growth of non-oil sectors.
  Iraq reveals five-year plan to diversify economy | AGBI
• Development Road Project: This infrastructure initiative seeks to connect Asia with Europe through a network of railways, highways, ports, and cities. By enhancing regional connectivity, the project is expected to generate $4 billion annually and create at least 100,000 jobs, thereby strengthening Iraq’s geopolitical position and economic stability.
  Development Road
• Iraq Development Fund: Established in August 2023, this fund focuses on creating an optimal investment environment and diversifying the country’s non-oil economic resources. It emphasizes strengthening the private sector and financing projects with significant social and environmental value.
  Development Fund (Iraq)

In terms of fiscal projections, Iraq anticipates generating revenues of ID710 trillion ($542 billion) during the 2024–2028 national development plan. Of this, non-oil revenues are estimated to reach ID79 trillion, reflecting the country’s commitment to economic diversification. Iraq forecasts $540bn revenue in five-year plan | AGBI

These concerted efforts underscore Iraq’s dedication to fostering a resilient and diversified economy with sustained growth beyond oil dependency.

Integrating Digital Economies

To enhance the authority of the article, it’s important to integrate reputable sources discussing the impact of digital economies on GDP growth globally.

The digital economy significantly contributes to global GDP growth, with varying impacts across countries. Here are some notable findings:

1. OECD Report on Digital Economy Growth: According to the OECD, the ICT sector in 27 OECD countries grew by an average of 6.3% annually, significantly outpacing total economic growth over the last decade. Strong performance is notable in countries like the United Kingdom and the Netherlands.
   OECD Report
2. Contribution to U.S. GDP: In 2019, the digital economy accounted for 9.6% of the U.S. GDP, reflecting its importance as a driver of economic growth.
   ITIF Report
3. India’s Projections: India’s digital economy is projected to contribute 25% to GDP by FY29, indicating significant growth potential as the country aims for a $7 trillion economy by 2028-29.
   Economic Times Article
4. Latin America Digital Economy: The digital economy constituted an average of 3.2% of GDP in key Latin American countries as of 2008, reflecting the growing role of digital technologies.
   ECLAC Report
5. Nigeria’s ICT Sector: Nigeria’s telecommunications sector currently contributes over 10% to GDP, exemplifying the significant impact of digital infrastructure on economic development.
   Economy of Nigeria

These sources provide insight into how digital economies are shaping global economic landscapes and can be referenced to validate the discussions surrounding Iraq’s initiatives to enhance non-oil revenues through digital transformation.

In conclusion, the potential for increasing non-oil revenues in Iraq through the implementation of digital systems and automation is not only promising but essential for the nation’s economic revitalization. These digital advancements herald a new era of efficiency, transparency, and innovation that can transform Iraq’s revenue landscape. As articulated by Prime Minister Mohammed Shiaa Al-Sudani, optimally investing in high-return areas holds the key to unlocking substantial economic growth.

Continued governmental commitment to these technologies, alongside a robust reform agenda, will provide the foundation for sustainable development. By fostering a culture of innovation and embracing modern solutions, Iraq can diversify its income sources, significantly reducing dependence on oil. This proactive approach not only enhances economic resilience but also creates new opportunities for entrepreneurship and job creation.

The journey ahead requires steadfast dedication and collaborative efforts among all stakeholders. As Iraq moves forward on this path, the rewards of a strong, balanced, and thriving economy are well within reach, setting a hopeful outlook for the future.

User Adoption Data and Impact of Digital Payment Systems in Iraq

In recent years, Iraq has witnessed a notable surge in the adoption of digital payment systems, significantly impacting the growth of non-oil revenues. The transition towards electronic payments marks a shift in the financial landscape, and key findings include:

1. Significant Increase in Transactions: Between 2023 and 2024, electronic payment transactions skyrocketed from 800 billion Iraqi dinars to over 2 trillion. Particularly, government payments surged from 287 million dinars in July 2023 to an impressive 912 billion dinars by July 2024, indicating a growing reliance on digital transactions.
   Key Developments in Iraq’s Financial System
2. Expansion of Payment Infrastructure: The number of point-of-sale (POS) terminals expanded from around 11,000 at the beginning of 2023 to over 50,000 by mid-2024, with thousands being installed in government institutions that previously lacked such technology. This infrastructure development facilitates increased cashless transactions, thereby enhancing revenue collection efficiency.
   Key Developments in Iraq’s Financial System
3. Regulatory Initiatives: In 2024, Iraq implemented the Digital Payment Regulation No.2, aimed at fostering financial inclusion by reducing dependence on cash. This regulation spurred the adoption of POS systems, e-wallets, and online payment mechanisms among businesses, contributing to a more transparent financial ecosystem.
   The Turning Point: Iraq’s Leap into the Digital Economy
4. Impact on Non-Oil Revenues: Budget figures indicate an impressive increase in non-oil revenues, which grew nearly threefold up to September 2024 compared to the same period in 2023. This boost saw non-oil revenues rising from constituting about 5% to 11% of total revenues, despite concurrent increases in oil revenues, showcasing the effectiveness of digital payment adoption in augmenting government income streams.
   Figures reveal non-oil revenue surge in 2024
5. FinTech Growth: The number of electronic transactions has dramatically increased, with platforms like AsiaPay and ZainCash leading the charge. The growth of electronic transactions from just over 1 million in 2018 to nearly 11 million in 2023, coupled with an increase in transaction values from 2.4 billion to approximately 9.6 trillion Iraqi dinars, exemplifies the digital economic shift. Projections suggest even further growth in electronic transactions for 2024.
   Does Iraq Have A Digital Economy?

These developments underscore the crucial role that digital payment systems play in enhancing financial inclusion and boosting non-oil revenues in Iraq, indicating a forward-moving trend towards a more diversified and resilient economy.

IMF Recommendations for Diversifying Non-Oil Revenues in Iraq

The International Monetary Fund (IMF) has provided several actionable recommendations aimed at assisting Iraq in diversifying its non-oil revenue sources and achieving fiscal stability:

1. Tax Policy Reforms
   • Personal Income Tax: Broaden the tax base by introducing more progressive rates to increase revenue from individual taxpayers.
   • Customs Tariffs: Revise the customs tariff structure by eliminating exemptions and increasing tariffs on luxury goods to enhance customs revenues.
   • Value-Added Tax (VAT): Consider the introduction of a VAT as a long-term solution to expand revenue streams.
2. Enhancing Revenue Administration
   • Implement a Treasury Single Account to consolidate all tax receipts, improving cash management and transparency.
   • Strengthen customs and tax administration to address issues such as informality and enhance revenue generation efficiency.
3. Structural Reforms for Economic Diversification
   • Develop labor market reforms to phase out mandatory public sector hires, align educational systems with private sector needs, and reduce job informality.
   • Modernize the financial sector by restructuring state-owned banks and improving access to credit for private enterprises.
   • Implement pension reforms to ensure fiscal sustainability and intergenerational equity.
   • Strengthen governance and anti-corruption measures to improve institutional effectiveness and the overall business climate.
4. Electricity Sector Reforms
   • Enhance efficiency and cost recovery within the electricity sector to alleviate fiscal burdens and foster economic growth.

These recommendations from the IMF emphasize the crucial need for Iraq to bolster its non-oil revenue base and decrease its reliance on oil, thereby supporting long-term economic growth and stability.

Government Initiatives to Boost Non-Oil Revenues

In recent years, the Iraqi government has been proactively implementing various initiatives to enhance non-oil revenues. Spearheaded by Prime Minister Mohammed Shiaa Al-Sudani, these efforts were particularly underscored during a significant meeting on August 20, 2025, dedicated to addressing the diversification of revenue sources and fortifying state finances.

Al-Sudani’s administration emphasizes the necessity of leveraging modern technologies and automation to optimize revenue collection processes. Specifically, Al-Sudani remarked on the potential of enhancing investments in areas yielding high returns, which aligns with Iraq’s strategic direction toward economic resilience. Key discussions during the meeting included:

1. Modernization of Revenue Systems: The government is focusing on integrating advanced digital systems and automation into various sectors to streamline revenue collection, thus ensuring efficiency and minimizing bureaucratic hurdles.
2. Reforming the Public Distribution System (PDS): Enhancements to the PDS, particularly concerning the food basket, are aimed at improving the quality and efficiency of subsidies distributed to citizens while concurrently increasing the system’s procurement capabilities for wheat and other essential commodities.
3. Strengthening Municipal Revenues: The discussions also pointed toward boosting Baghdad Municipality’s income through improved management of property revenues and development projects, allowing local governments to generate funds that can be reinvested into community infrastructure.
4. Increased Tax Compliance Efforts: Acknowledging the significance of tax compliance, the Iraqi government is working on enhancing revenue collection from various government ministries, particularly focusing on broadening the tax base to capture more revenue streams. This initiative is part of Iraq’s broader effort to reach a 22% growth in tax revenues, which was reported in August 2024, thanks to recent reforms.
5. Collaboration with the IMF: In alignment with the recommendations from the International Monetary Fund (IMF), the Iraqi government is exploring reforms in customs duties and enhancing tax administration processes. This reform aims to broaden the revenue base while also striving to rationalize government spending to ensure fiscal stability.

As part of a holistic approach, these initiatives are interconnected and are designed to create a robust framework conducive to sustainable economic growth. Each step is taken with the overarching goal of reducing Iraq’s dependency on oil revenues and positioning the country towards a diversified and resilient economic landscape. The commitment to fostering non-oil revenues reflects the government’s vision for a balanced economy that can weather fluctuations in global oil markets.

• Dependency on Oil Revenue: Iraq’s economy is heavily reliant on oil, which makes it vulnerable to price fluctuations and external economic pressures.
• Lack of Infrastructure: Inadequate infrastructure hampers the growth of non-oil sectors, affecting investment in industries such as tourism and agriculture.
• Regulatory Barriers: Bureaucratic red tape and regulatory inefficiencies deter private sector investment and limit business opportunities.
• Political Instability: Persistent political challenges can undermine economic reforms and deter international investments crucial for diversification.
• Corruption: Corruption remains a significant challenge, affecting transparency and efficiency in revenue collection processes.
• Limited Skill Development: A lack of skilled workforce in diverse industries limits the potential for growth in non-oil sectors.
• Over-reliance on State Revenues: Heavy reliance on state-run enterprises for revenue generation hinders the growth of private sectors that could contribute to a more robust economy.
• Economic Mismanagement: Past economic mismanagement poses challenges in reallocating resources efficiently to support emerging sectors.
• Global Economic Conditions: External economic factors, such as international sanctions and global market conditions, can impact Iraq’s ability to diversify its economy effectively.

Introduction

Iraq is at a critical point in its economic journey. The country faces serious challenges due to its heavy reliance on oil revenues. Fluctuating oil prices and geopolitical risks highlight the urgent need for economic diversification strategies. As Iraq looks to strengthen its economy, digital economy in Iraq initiatives and non-oil revenues could provide a vital opportunity. Led by Prime Minister Mohammed Shiaa Al-Sudani, there is a growing focus on using modern technologies and automation in financial systems to improve revenue systems. This significant change aims to boost efficiency and transparency, paving the way for sustainable economic growth.

Digital Systems Comparison

Current State of Non-Oil Revenues in Iraq

As of August 2025, Iraq has been actively implementing strategies to enhance its non-oil revenues, recognizing the need to diversify its economy amid fluctuating oil prices. The discussions emphasized deploying modern technologies, digital systems, and automation in financial systems to improve revenue collection and efficiency.

Optimistic Conclusion

In conclusion, the potential for increasing non-oil revenues in Iraq through the implementation of digital systems and automation is not only promising but essential for the nation’s economic revitalization. As articulated by Prime Minister Mohammed Shiaa Al-Sudani, optimally investing in high-return areas holds the key to unlocking substantial economic growth.