Economist: Salary delays threaten to paralyze markets and reveal a severe liquidity crisis
Economist: Salary delays threaten to paralyze markets and reveal a severe liquidity crisis
1-29-2026
Information/Special..
Economic expert Mustafa Al-Faraj warned that the continued delay in paying employee salaries in Iraq is a dangerous indicator of a worsening liquidity crisis, stressing that the regularity of salaries is no longer just a service issue, but an economic necessity to protect the local market from stagnation and paralysis.
Al-Faraj told Al-Maalouma that more than 60% of the consumption volume in Iraq depends directly on the fixed monthly income of employees and retirees, explaining that any delay in paying salaries immediately affects the purchasing power of citizens, leading to a clear recession that begins with non-essential goods and gradually extends to include food items.
He added that the repercussions of this recession are not limited to the citizen only, but also put great pressure on shop owners and small traders, and lead to a slowdown in the monetary cycle within the economy, which negatively affects commercial activity and the state’s tax revenues.
He pointed out that the delay in salaries is mainly due to the lack of liquidity resulting from the financial deficit that the country is going through, noting that internal debts have reached more than 80 trillion dinars, warning that the liquidity crisis may be repeated monthly and permanently affect the salaries of employees if the financial imbalance is not addressed.
He stressed that the solution lies in adopting real financial reforms, including reducing unnecessary government spending, reviewing the salaries and allowances of senior officials, and controlling public spending, in order to ensure the sustainability of salary payments and maintain market stability.
He concluded by saying that continued delays in salary payments will deepen the economic recession and threaten the stability of local markets, requiring urgent government action to avert an economic paralysis that will be difficult to contain in the future.
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