Economist: Addressing the deficit begins with rationalizing spending, not by burdening citizens with the cost of the crisis.
Economist: Addressing the deficit begins with rationalizing spending, not by burdening citizens with the cost of the crisis.
10-10-2026
Information/Special…
Economic expert Jalil al-Lami affirmed on Saturday that addressing the financial crisis facing Iraq requires starting with rationalizing government spending and reviewing areas of waste before burdening citizens with additional costs resulting from exchange rate fluctuations and rising prices. He explained that addressing the deficit cannot be limited to measures that affect citizens’ purchasing power.
Al-Lami told Al-Maalouma, “Discussions about a liquidity crisis and inflated operational expenses must be accompanied by a serious review of the creation of new positions and agencies, and the associated salaries, allowances, security details, and government purchases that drain the public treasury.”
He added, “Creating ten agencies at a hypothetical cost of ten billion dinars annually for each means spending approximately one hundred billion dinars annually and one trillion dinars over ten years, without any guarantee of achieving an economic or service-related return commensurate with the size of these expenditures.”
Al-Lami stated that “reducing the salaries and allowances of the three presidencies and senior officials, and reviewing their privileges, represents one possible path to controlling spending.” He pointed out that “reducing five million dinars monthly from the total entitlements of a thousand officials could save approximately sixty billion dinars annually. This amount alone would not solve the deficit, but it reflects the seriousness of the reform and the fairness of the distribution of burdens.”
He noted that “raising the exchange rate of the dollar from 1320 to 1520 dinars represents an increase of approximately 15.15 percent in the official dollar rate.” He explained that “the cost of an imported commodity worth one hundred dollars increases mathematically from 132,000 dinars to 152,000 dinars, while the dollar value of an employee’s salary of one million dinars decreases from approximately $758 to approximately $658. It should be emphasized that this does not mean a corresponding decrease in purchasing power, as the actual impact depends on price movements in the markets.”
Al-Lami pointed out that “the new salary scale still faces financial and legislative challenges, despite the significant disparity in salaries among state employees.” He noted that allowances in some institutions reach double the basic salary, according to official statements from the Ministry of Planning. This necessitates a clear timetable to address this disparity and ensure fairness for lower-level positions, commensurate with the state’s financial capabilities.
Al-Lami emphasized that “genuine economic reform cannot be achieved solely through increased dinar revenues resulting from exchange rate changes. Rather, it begins with reviewing sovereign spending, high-level privileges, government procurement, combating waste, and developing non-oil revenues.” He stressed that addressing the budget deficit should be based on a fair distribution of burdens and protecting citizens’ purchasing power, instead of shifting the cost of the crisis from the public treasury to the pockets of ordinary citizens.
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