Objectives The research aims to demonstrate the role of financial discipline and digital transformation in enhancing Foreign Reserve Adequacy. This is achieved by measuring the impact of financial discipline and digital transformation indicators on the foreign reserves adequacy index for the period (2004-2024). Methodology This research relies on a combination of the descriptive-deductive approach to present the economic concepts related to the research variables, and standard quantitative methods to test the research hypothesis using time series data comprising 21 observations for the period (2004-2024), Since the research sample covers the Iraqi economy over a relatively short period (2004–2024), the number of annual observations is insufficient for the effective application of modern standard methods and programs. To address this issue, the annual data were converted into quarterly data using a predefined standard equation available in EViews 12. Specifically, the conversion employed the “Quarterly” method with the “Linear” option, ensuring a continuous and consistent quarterly time series. Findings The most important finding of the research is the results of the standard model estimation (ARDL) proved the existence of a long-term equilibrium relationship that moves from the explanatory variables, represented by (indices of fiscal discipline and digital transformation), towards the dependent variable, which is the subject of the research, represented by (the index of the adequacy of foreign reserves in Iraq). Conclusions The research concluded a set of recommendations. First, the most government must adopt is a program to restructure public spending by reducing inflated consumer spending in favor of investment spending in exportable productive sectors, to ensure that fiscal policy contributes to generating foreign currency inflows that strengthen the central bank’s foreign reserves.
Awad et al. (Mon,) studied this question.