Iraq faces major economic difficulties and blocs “impose” budget spending doors
Iraq faces major economic difficulties and blocs “impose” budget spending doors
1-2-2025
Information/Report..
Warnings are increasing that Iraq will face economic difficulties in the coming period for a number of reasons, including its reliance on oil as the sole source of the financial budget, which threatens the state’s ability to pay salaries.
December 2024 witnessed a delay in the disbursement of salaries to employees and retirees, while the Ministry of Finance denied the existence of a shortage in liquidity and confirmed that the reason was due to conducting final accounts.
Political forces and experts warned of the danger of political interference in determining spending items, especially in light of the challenges facing Iraq from the economic and security aspects after the terrorist groups took control of Syria.
In this regard, Salam Al-Zubaidi, a leader in the Coordination Framework forces, confirmed today, Thursday, that the Central Bank and the Ministry of Finance may face great difficulties due to political blocs and components imposing certain spending doors on the government.
Al-Zubaidi said in an interview with Al-Maalouma Agency, “The financial policy in Iraq is not clear and the economic situation is exposed to many pitfalls due to Iraq’s dependence on oil as the sole source of the budget, at a rate of 90 percent,” indicating that “many of the spending items in the financial budget were imposed on the government and there is no balance between revenues and incomes.”
He added, “The current path of the Iraqi state’s financial plan is not clear, and the spending doors that may be imposed by political blocs and components may embarrass the Central Bank and the Ministry of Finance in terms of revenues,” indicating that “stopping oil exports from the Kurdistan Region and not delivering imports has greatly affected the volume of imports and the government’s financial capacity.”
He stresses the “necessity of redrawing the financial policy of the Iraqi state by the Ministries of Finance and Planning and recalculating many of the resources of the Iraqi state, not relying on oil and having other resources and a balance between imports and expenditures.”
In contrast, the financial and economic advisor to the Prime Minister, Mazhar Muhammad Salih, denies the existence of a salary crisis in the country, stressing the existence of large financial reserves that cover the required liquidity.
Mazhar Muhammad Salih said in an interview followed by Al-Maalouma Agency, “There have been speculations recently about oil prices, a liquidity crisis, and so on,” noting that “at the end of the fiscal year, a financial audit process takes place, and thus there may be a slight delay in issuing salaries for a few days, according to accounting reconciliations.”
The Prime Minister’s advisor points out that “there is no salary crisis, and what is happening here and there in this regard is nothing more than fantasy.”
Regarding the size of the monetary mass outside the Central Bank, Mazhar Muhammad Salih explains that it is “around 100-105 trillion dinars,” noting that “the size of the monetary mass inside the banking system is less.”
He stressed: “We have large foreign exchange reserves that completely cover this liquidity, which is estimated at about $105 billion.”
The monthly salaries of employees were delayed in the last month of 2024, while the Ministry of Finance usually pays the wages of self-financing companies starting from the middle of each month, as well as to the members of the ministry and banks, while the salaries of other ministries are released starting from the 23rd of each month.
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