Iraq is on track to record a massive $21.5bn deficit in 2016, a modest improvement on last year’s $26bn. The recently-passed 2017 budget projects a deficit of ‘only’ $18.4bn, though a conservative oil price assumption means it may undershoot.

Iraq is banking on higher oil revenues in 2017 to aid its struggling economy, which has been battered by the twin shocks of the oil price crash and the conflict with Islamic State (IS). Oil prices have rallied in the aftermath of this...