Liquidity Shortage Delays Iraqi Salaries: Experts Warn Of Prolonged Financial Strain

2026-01-29 Shafaq News Economic assessments differ over Iraq’s ability to overcome its current liquidity crisis, while concerns grow among public sector employees over delayed salary payments.

As of January 29, government salaries had not been disbursed, despite payments typically being issued between the 20th and 25th of each month, fueling frustration and anxiety among state employees. An informed source attributed the delay to a “shortage of cash,” despite the completion of payroll lists and funding procedures, citing limited liquidity in government banks as the main cause of the disruption.

According to an official document from the Finance Ministry, a directive issued by the minister instructs all departments and branches to maintain working hours during and beyond official times until salary distribution is completed. Meanwhile, the federal Finance Ministry announced that it has begun releasing salary funding for state institutions, ordering payments to be made in batches.

Economic analyst Nabil Al-Marsoumi warned of widening financial instability and the persistence of the salary crisis in the absence of a fully empowered government.

Speaking to Shafaq News, he cautioned that a potential US veto over the appointment of Nouri al-Maliki as the next prime minister could delay approval of the 2026 federal budget. “Iraq, in all cases, needs a new government to replace the caretaker cabinet,” he said, warning that continued delays would intensify economic and financial disruption.

Al-Marsoumi noted that failing to form a new government would leave the caretaker administration without legal authority to borrow from state banks, and that recent salary delays could continue in the coming months and may worsen.

On the possibility of resolving the financial crisis without a rise in oil prices, the analyst said, “There is no real hope.”

While prices are currently approaching $70 per barrel, he described the increase as temporary and tied to geopolitical tensions, predicting prices will fall once regional security conditions stabilize. He also stated that any potential boost in oil revenue would not reach Iraq for at least two months, increasing financial risks amid the absence of a fully authorized government.

Meanwhile, caretaker Prime Minister’s adviser Muthir Mohammed Saleh told Shafaq News that the government can legally resort to borrowing if the federal budget is not approved and a temporary liquidity shortage occurs, provided the borrowing is limited, short-term, and strictly allocated to essential spending.

“Such borrowing could be used to cover priority obligations, including salaries, pensions, and social welfare payments, under the Federal Financial Management Law No. 6 of 2019, in line with Article 29,” Saleh explained, stressing that borrowing in this context must remain domestic, short-term, and excluded from long-term commitments or new investment spending, with repayment to follow after budget approval.

“Ensuring the continuity of salary and pension payments is vital to economic and social stability and strengthens public confidence in fiscal and monetary policy,” Saleh noted, including that temporary financing tools such as treasury advances or limited domestic borrowing can be used as long as they do not evolve into permanent financial obligations.

Written and edited by Shafaq News staff.

https://www.shafaq.com/en/Report/Liquidity-shortage-delays-Iraqi-salaries-Experts-warn-of-prolonged-financial-strain

Iraq Engages Washington And Tehran To Contain Rising Tensions

2026-01-29 Shafaq News– Baghdad Iraq is continuing dialogue with both the United States and Iran to prevent further escalation and shield the region from war, a senior Foreign Ministry official said on Thursday, as military signaling between Washington and Tehran intensifies.

Foreign Ministry Undersecretary Hisham Al-Alawi told Shafaq News that Iraq maintains strong relations with both the United States and Iran and is using those ties to reduce regional tensions, adding that during Foreign Minister Fuad Hussein's recent visit to Tehran, he stressed Baghdad’s interest in easing military escalation and addressing tensions between Washington and Tehran through dialogue.

“Any escalation would not affect Iraq alone but would have consequences across the region,” Al-Alawi warned, pointing to the impact of the June conflict involving Iran, Israel, and the United States, which lasted 12 days, as an example of how quickly regional instability can spread.

He added that Iraq has a national interest in working with neighboring countries and the United States to strengthen regional stability and address outstanding issues, including Iran’s nuclear file and other disputes, through diplomatic means.

“Iraq, along with other countries, has contributed in recent months to averting a potential military strike on Iran.”

In December, caretaker Prime Minister Mohammed Shia Al-Sudani said in a televised interview with Al-Mayadeen TV that efforts were “ongoing” to host negotiations between the United States and Iran in Baghdad, but no steps toward such talks have been announced since then.

The Wall Street Journal reported on Thursday that US President Donald Trump had received full military briefings on possible offensive options against Iran, including a broad bombing campaign targeting Iranian regime facilities and the Islamic Revolutionary Guard Corps, as well as strikes on “symbolic targets,” with the possibility of escalation if Iran does not halt its nuclear program.

Separate disclosures by Western sources cited by Reuters said Trump is also considering options to target Iranian leaders and officials linked to violence, while his aides assess strikes intended to have a lasting impact.

On the Iranian side, senior Iranian military, political, and diplomatic officials have said in recent statements that Tehran is prepared to confront the United States if necessary, stressing readiness to respond to any military action while warning of consequences for regional stability.

https://www.shafaq.com/en/Iraq/Iraq-engages-Washington-and-Tehran-to-contain-rising-tensions