Iraq nominates banker for PM as cash crisis deepens

• Ali Al-Zaidi to form new government
• Former head of US-sanctioned bank
• Iraqi oil exports plummet during war

Iraq has nominated veteran banker and businessman Ali Al-Zaidi as prime minister, against the backdrop of a domestic liquidity crisis caused by a drop in oil exports following Iran’s decision to shut the Strait of Hormuz.

Iraqi President Nizar Amedi on Monday tasked Al-Zaidi, a multimillionaire and political newcomer, with forming a new government following nomination by the Coordination Framework parliamentary bloc. 

The prime minister-designate has 30 days to present a cabinet to parliament, with 167 votes required to secure a vote of confidence. 

This is the first time in Iraq’s modern history that a businessman with no previous political experience has been named prime minister, according to Nabil Al-Marsoomi, an economics professor at Basra University in southern Iraq.

“This man is a qualified businessman and his appointment is needed at this time, but I believe his nomination will send negative signals to the US because he had headed a bank which was sanctioned by Washington,” Al-Marsoomi told AGBI.

Following the Iraqi election in November, the US administration threatened to cut ties if Nouri al-Maliki, a hardline Shia politician with links to Iran, emerged from horse-trading as prime minister. Washington also put pressure on Iraq’s political class when it cut transfers from a New York-based escrow account into which the country’s oil earnings are still paid over 20 years after the US invasion.

Al-Zaidi, born in the southern Dhi Qar governorate in 1986, holds a bachelor’s degree in law and a master’s degree in finance and banking, according to the Iraq Bar Association, of which he is a member.

He was appointed chairman of the National Holding Company, a private investment group founded in 2017. He also served as chairman of Al-Janoob Islamic Bank until 2019. The bank was sanctioned by the US two years ago over alleged money laundering, fraud and illicit use of currency and was also banned by Iraq’s central bank.

The appointment of Al-Zaidi, who replaces caretaker prime minister Mohammed Shia Al-Sudani, a technocratic Shia politician, coincides with Iraq’s worsening financial situation due to low oil exports.

The closure of the strait has forced Iraq to slash crude production to around one third of its pre-conflict export level of nearly 4.3 million barrels per day, depriving Opec’s second-largest oil producer of most of its hard-currency resources.

In February, Iraq netted around $7 billion from oil exports of more than 4 million barrels per day but revenues slumped to $1.8 billion in March and are expected at that level in April, according to the finance ministry.

Iraq, which controls the world’s fifth-largest recoverable oil deposits, is yet to issue a 2026 budget as the relevant legislation has not been sent to parliament.

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Iraq’s economy is heavily reliant on government spending, which accounts for nearly 50 percent of GDP and is the primary driver of growth, Mudhar Saleh, an economic adviser to Sudani, told the daily Al-Sabah. 

“Any delay in approving the budget becomes a stagnation factor affecting both the public and private sectors, creating a prolonged state of uncertainty,” Saleh was quoted as saying.

In the first 11 months of 2025, Iraq recorded a budget deficit of around ID13 trillion ($10 billion), way below the $49 billion shortfall projected for the whole year, mainly due to lower expenditure, the finance ministry reported in January.

Iraq has also suffered from a weak banking system due to widespread corruption and an accumulation of bad debt over the past decades.

This has prompted the country to embark on restructuring its financial sector via a five-year plan involving mergers and increasing the capital of small banks. The central bank is executing the plan with help from London-based Ernst & Young and US management consulting company Oliver Wyman.