Iraq Economic News and Points To Ponder Tuesday Morning 8-4-26
Salaries Are Causing Panic Among Iraqis; Parliamentary Action Is Underway To Secure Them.
Information/Special.. MP Duha Laibi Al-Bahadli revealed today, Monday, a parliamentary move to host the Minister of Finance inside the House of Representatives, to discuss the issue of salaries and to identify the most prominent financial challenges facing the process of securing them.
Al-Bahadli told Al-Maalouma that "the issue of salaries affects the livelihood security and social stability of millions of Iraqis, which necessitates that it be at the forefront of the House of Representatives' priorities, by hosting the Minister of Finance and the concerned authorities to learn about the size of the financial deficit and the available liquidity, and to discuss ways to ensure the regularity of salary payments."
She added that "the hosting aims to put in place clear and sustainable solutions that prevent employees and retirees from bearing the consequences of financial imbalances."
Al-Bahadli pointed out that “salaries represent a legal and living right that should not be subject to postponement or be limited to temporary solutions, or have their disbursement linked to a decrease in financial revenues.”
She explained that "the House of Representatives will closely monitor all procedures related to salary disbursements and track any delays in their release," emphasizing its commitment to obligating the government to establish a consistent mechanism that guarantees regular payments and prevents any manipulation of citizens' rights, particularly those of employees and retirees. (End of page 25)
The Crisis Is Worsening... Will Salaries Be Paid Every 45 Days After The Government Hinted At Its Inability To Address The Issue?
Information/Report.. The crisis of delayed salary payments has created a wave of panic among Iraqis, especially after statements by ministers in the Al-Zaidi government regarding the difficulty of securing those salaries as was customary in the past, due to the lack of financial liquidity that the state is suffering from, following the paralysis that affected oil exports due to the crisis in the Strait of Hormuz and the absence of export alternatives.
Observers and economists believe that the government is required to take urgent and immediate action to ensure that salaries continue to be distributed on their scheduled dates, as they are the main driver of the country's economic cycle, on which more than 40 million Iraqis depend.
Meanwhile, parliamentary moves have emerged to discuss the repercussions of this crisis and to ascertain its true nature, by hosting the Ministers of Finance and Oil, to find out if the government has put in place solutions to avert the risks that threaten the salaries of a large segment of Iraqis.
In this context, MP Duha Laibi Al-Bahadli revealed in a statement to Al-Maalouma that there is a parliamentary move to host the Minister of Finance in the House of Representatives to discuss the issue of salaries and to identify the most prominent financial challenges facing the process of securing them, indicating that the issue of salaries affects the livelihood security and social stability of millions of Iraqis, which requires that it be at the top of the priorities of the House of Representatives.
Al-Bahadli pointed out that “salaries represent a legal and living right that cannot be subject to postponement or be satisfied with temporary solutions, or have their disbursement linked to a decrease in financial revenues,” noting that “the House of Representatives will closely follow all procedures related to the disbursement of salaries, and monitor any delay in their release, stressing the work to obligate the government to put in place a fixed mechanism that ensures the regularity of disbursement and does not tamper with the rights of citizens, especially employees and retirees.”
In turn, the head of the Al-Faw Zakho bloc, MP Amer Abdul-Jabbar, warned in a statement to Al-Maalouma of “the worsening financial crisis, stressing that the deficit required to secure employee salaries is estimated at about 3 trillion dinars,” while he pointed out that “the continued disruption of oil exports through the Strait of Hormuz raises serious concerns about its repercussions on public revenues, which may push the government to delay the disbursement of employee Salaries during the next month.”
Abdul-Jabbar added that "the House of Representatives will discuss during its upcoming sessions the repercussions of the financial crisis and its impact on the salaries of state employees, in addition to discussing measures to ensure the continued payment of salaries and address the financial deficit."
Iraqis are increasingly concerned that the salary payment cycle might be extended to 45 days instead of 30, especially after government statements indicated the need to adapt to a new salary disbursement mechanism. This comes in light of the sharp decline in revenues resulting from the cessation of the main source of income the state relies on for liquidity. Meanwhile, the public awaits serious and urgent government measures to address the crisis, ensure the regular payment of salaries, and end the growing anxiety among employees and retirees.
Channel8 Exclusive: Iraq Faces Liquidity Crunch As Oil Revenues Fall
Shanya Salar At a Glance
Iraq faces a cash liquidity shortage.
July salary funding remains under pressure.
Oil revenues have dropped sharply.
Borrowing and currency printing under discussion.
Information obtained by Channel8 indicates that Iraq is facing a severe liquidity crisis following a sharp decline in oil revenues, prompting discussions about domestic borrowing and the possible printing of new currency to finance public-sector salaries and government spending.
Key Statements and Focus Area
Channel8 has learned that Iraq is facing an immediate cash shortage to finance salaries.
More than $7 billion has been withdrawn from foreign currency reserves this year.
Oil revenues have reportedly fallen by 80% due to disruptions to exports through the Strait of Hormuz.
Officials are weighing borrowing and currency issuance as possible short-term solutions.
Liquidity Shortage Puts Pressure on Public Finances
Information obtained by Channel8 shows that Iraq is experiencing a shortage of Iraqi dinar liquidity, making it increasingly difficult for the government to finance public sector salaries and operational expenditures.
The financial strain follows a sharp decline in oil revenues linked to disruptions affecting exports through the Strait of Hormuz.
Dilan Ghafour, a member of the Parliamentary Finance Committee, said Iraq is considering two main options to manage the current financial shortfall until export conditions improve.
The options include domestic borrowing and printing additional Iraqi dinars.
She noted that any decision to issue new currency would require careful assessment against Iraq's foreign exchange reserves to avoid increasing inflation.
According to Ghafour, the government has relied on loans from Rafidain Bank and Rasheed Bank in recent months to help finance salary payments.
However, She said the lending capacity of the two state-owned banks is limited and cannot indefinitely cover the government's financing needs.
She added that Iraq could also use its foreign currency and gold reserves as collateral to secure domestic or international loans if necessary.
Reserves Decline as Spending Continues
According to the latest monetary data, Iraq's foreign currency reserves have fallen from $101 billion at the beginning of the year to $93.67 billion after more than $7 billion was withdrawn over the past five months to finance government expenditures.
Iraq requires approximately 8 trillion Iraqi dinars each month to pay public sector salaries.
According to the information obtained by Channel8, only 4.5 trillion dinars have been made available for July salary payments because of the sharp decline in oil revenues.
FYI
Iraq's economy remains heavily dependent on oil exports, which provide the majority of government revenue. The country previously relied on its foreign currency reserves during the war against ISIS and the COVID-19 pandemic before rebuilding them through higher oil prices. Economists view Iraq's foreign exchange holdings and 174.6 tons of gold reserves as key financial buffers that can help absorb economic shocks and support borrowing during periods of fiscal pressure.
https://channel8.com/english/news/62873
Iraqi Finance Minister Requests Urgent Parliamentary Hearing on Financial Crisis
Daban Mohammed At a Glance
Iraqi Finance Minister requested an urgent hearing.
The session will expose economic realities.
Strait of Hormuz blockade has crashed monthly oil revenue from $6 billion to $1 billion.
Iraqi Finance Minister Faleh al-Sari has formally requested an emergency parliamentary hearing to brief the Council of Representatives on the country's deepening financial crisis.
Key Statements and Focus Area
Al-Sari noted that the move aims to maintain transparency with lawmakers while reviewing ministry measures to keep the state afloat and push forward with administrative reforms.
According to a Monday statement from his media office, al-Sari asked the Parliament's Presidency to host him "in the earliest upcoming parliamentary session."
The Minister intends to lay bare the country's economic reality and outline the severe pressures hitting public finances due to volatile regional conflicts.
lawmakers are publicly debating even more drastic measures. Dilan Ghafour, a Kurdish MP and member of the parliamentary Finance Committee, said the state is weighing domestic borrowing against printing new currency to cover the gap.
Ghafour warned that printing fresh dinars is a dangerous gamble that requires a strict calculation against foreign reserves to avoid triggering runaway inflation.
She added that while limited loans from state banks currently keep salaries moving, Iraq may soon have to pledge its gold and foreign currency reserves as collateral to secure larger international or domestic loans.
FYI
The financial outlook remains bleak. A military blockade at the Strait of Hormuz has choked off Iraq's critical oil exports, starving the treasury of immediate cash.
For a country that relies on oil for over 90% of its state revenue, the impact is devastating: monthly oil inflows have plummeted from a steady $6 billion down to just over $1 billion.
This export collapse has triggered a massive cash crunch. The Ministry of Finance needs 7.8 trillion Iraqi dinars every month just to cover public payrolls, but it faced a crippling 3.3 trillion dinar deficit for July payouts alone.
As a result, millions of civil servants, pensioners, and social welfare recipients are facing staggered, weeks-long delays on their checks.
To cope with the shortfall, the government has abandoned plans for an independent 2026 budget altogether. Officials have instead pivoted to writing the 2027 draft, leaving current state spending operating under a restrictive 1/12th emergency rule.
Desperate for cash, the state is looking at high-stakes workarounds. The government is currently pushing parliament to pass a 10 trillion dinar Emergency Borrowing Law to keep daily operations running. https://channel8.com/english/news/62910