The role of digital technologies in improving the efficiency of financial decisions and its implications for the effectiveness of fiscal policy in Iraq

Abstract

This study examines the role of digital technologies in shaping fiscal decision-making and public finance sustainability in the Iraqi economy. Focusing on the institutional and informational dimensions of fiscal policy, the research analyzes how limited digital capacity impacts the efficiency of government spending, revenue mobilization, and the dynamics of the deficit and public debt. The study employs a qualitative analytical methodology based on an institutional and diagnostic fiscal framework, relying on official data from Iraqi federal budget laws, budget execution reports, and final accounts, supported by analytical assessments from the International Monetary Fund and the World Bank. The analysis reveals that fiscal decision-making in Iraq is constrained by structurally rigid spending patterns, excessive dependence on volatile oil revenues, recurring fiscal deficits, and reactive public debt management. These challenges are exacerbated by weak digital public financial management systems, limited forecasting and monitoring tools, and a fragmented financial information infrastructure, which undermines allocation efficiency, budget credibility, and long-term sustainability. The findings indicate that digital constraints play a crucial role in exacerbating fiscal vulnerabilities by weakening the quality and timeliness of decisions related to spending, revenue, deficit, and debt. This study contributes to the fiscal policy literature by providing an institutional assessment of fiscal sustainability in a resource-dependent economy, and highlights the importance of strengthening the digital financial infrastructure to support more informed, credible and sustainable fiscal policymaking in Iraq.