Iraq Economic News and Points To Ponder Wednesday Afternoon 8-4-26
Is Money Being Printed To Pay Salaries? An Economist Explains The Risks And Warns Of The Consequences.
Baghdad Today - Baghdad Financial and economic expert Ahmed Abdel Rabbo warned on Wednesday (August 5, 2026) against calls to print currency to secure employee salaries or finance the financial deficit, considering that they lack legal and economic foundations and may lead to serious repercussions on monetary stability and the Iraqi economy.
Abd Rabbo told Baghdad Today that the Central Bank of Iraq Law No. (56) of 2004 regulates the process of issuing currency, explaining that printing currency is a technical procedure aimed at managing the money supply and meeting the needs of the economy, and is not a means of financing government expenditures or covering the financial deficit.
He added that issuing new quantities of currency without real growth in production or an increase in corresponding assets leads to an unjustified rise in cash liquidity, which is reflected in increased inflation rates, a decline in the purchasing power of the dinar, and a decrease in the real value of citizens’ salaries and savings.
He explained that what is known economically as "financing by printing" is one of the most dangerous options in times of financial crisis, because it weakens confidence in the local currency and increases demand for foreign currencies, especially the dollar, which exacerbates pressure on the exchange rate and affects financial stability.
Abdel Rabbo pointed out that there is confusion between the monetary policy tools managed by the central bank and the fiscal policy undertaken by the government, explaining that the use of local debt instruments or discounting treasury bills is different from printing currency to finance current spending, as these instruments are subject to legal and financial controls, while the other option leads to continuous inflationary pressures.
He stressed that addressing the liquidity crisis should rely on sustainable financial and economic reforms, including rationalizing government spending, maximizing non-oil revenues, developing electronic tax and customs collection, recovering looted funds, combating corruption, and expanding the use of domestic debt instruments within controls that maintain monetary stability and protect citizens’ purchasing power.
Discussions in Iraq increase during periods of financial pressure regarding the mechanisms for financing government spending, particularly employee salaries, given the budget's heavy reliance on oil revenues.
Economic experts confirm that addressing the fiscal deficit requires structural reforms and diversifying revenue sources, while the Central Bank of Iraq stresses the importance of maintaining monetary policy stability, the value of the dinar, and reducing inflationary pressures. https://baghdadtoday.news/304420-.html
The Salary Crisis Tops The Agenda Of The Meeting Between The State Administration And The Three Presidencies.
Information/Special.. Salah Boushi, a member of the State of Law Coalition, stated on Wednesday that the meeting of the State Administration Coalition, in light of the challenges facing Iraq, is of exceptional importance in addressing the economic crisis, specifically the issue of delayed salaries.
Bushi explained to Al-Maalomah News Agency that “the extraordinary meeting of the State Administration Coalition stems from the participation and presence of the three presidencies to discuss many issues, foremost among them the current financial crisis and finding solutions to it,” noting that “solving the financial crisis now requires political and economic decisions to rationalize importance spending, diversify non-oil revenues, and rearrange budget priorities in a way that preserves the rights of citizens.”
He emphasized that "any agreement and understanding between the political forces and the three presidencies will directly impact financial and economic stability and strengthen citizens' confidence in the state's direction," adding that "true success is not measured by the number of meetings, but by the state's ability to translate political consensus into economic decisions that alleviate the burdens on citizens and establish long-term financial stability." (End of 25)
Parliament Hosts The Minister Of Finance To Discuss The Delay In Paying The Salaries Of More Than One Million Employees.
The Information Agency/Baghdad... MP Ibtisam Hashim al-Hilali, from the State of Law Coalition, confirmed on Wednesday that the Parliament will host Finance Minister Falih al-Sari next week to discuss the reasons for the delay in paying the salaries of more than one million permanent employees.
Al-Hilali said in a statement received by the Information Agency that “the meeting will address the financial and economic situation in the country, as well as discuss the measures required to reduce expenditures and maximize non-oil revenues,” emphasizing her rejection of any tampering with employee salaries.
She added that "changing the salary payment dates is a violation of the law," noting that Iraqi legislation stipulates a 30-day month for calculating salaries, wages, and allowances in state institutions and the public and mixed sectors.
Al-Hilali indicated that “Parliament will discuss during the session the reasons for the salary delays and their impact on the living, social, and economic conditions of employees.” End/25
Deficit Consumes Nearly Half Of Iraq's Projected 200 Trillion IQD 2027 Budget
Daban Mohammed
At a Glance
Iraq faces a record 100 trillion IQD budget deficit.
Oil covers only one-quarter of state operational expenses.
The Kurdistan Region demands a 25 trillion IQD share.
The Strait of Hormuz instability severely disrupted budget planning.
Iraq is on the precipice of a severe financial crisis as the federal government grapples with a record-breaking projected deficit of 100 trillion Iraqi Dinars (IQD) in the upcoming 2027 national budget.
Key Statements and Focus Areas
The total estimated volume of the 2027 budget will reach 200 trillion IQD, with nearly half of the entire fiscal plan consisting of a deficit.
KRG based their 25 trillion IQD demand on the latest census data and strictly reject any settlement limited solely to employee salaries.
Channel8 has learned that there is a critical mismatch in state finances: monthly oil revenues have plummeted to just 2.5 trillion IQD, while the government requires 10 trillion IQD monthly to cover its basic operational expenditures.
Consequently, oil revenues currently cover only one-quarter of the country's public salaries and ministerial expenses, forcing Baghdad to actively pursue internal and external borrowing options to sustain state operations.
The total estimated volume of the 2027 budget is set to reach 200 trillion IQD, meaning nearly half of the entire fiscal plan will consist of a deficit.
The federal framework allocates 150 trillion IQD toward public sector salaries and general state expenditures, while reserving 50 trillion IQD for investment and infrastructure projects.
Amid these financial strains, the Kurdistan Region is formally demanding a 14.1% share of the national budget, which equates to approximately 25 trillion IQD.
Regional authorities have based this claim on the country's latest census data and have strictly rejected any fiscal settlement that limits their allocation exclusively to public employee salaries.
To optimize state spending and prevent institutional financial waste, Iraq is collaborating with the World Bank to implement a comprehensive "Program and Performance Budgeting" system.
FYI
Drafting the budget blueprint has faced severe disruptions due to dropping global energy prices and acute instability surrounding the Strait of Hormuz. Because Iraq relies on oil revenues to fund 90% of its national budget, maritime security threats to its primary export corridor pose a direct risk to national stability.
To mitigate these adverse market effects, Baghdad is urgently seeking alternative oil export routes. Current strategic plans include expanding export capacities through the Syrian Port of Baniyas and finalizing an agreement to sell one million barrels of oil to Turkey.
Meanwhile, the Iraqi Parliamentary Finance Committee, chaired by MP Uday Awad Kadhim, met last week with Budget Department Director General Milad Ziad Abdul Mawla to finalize fiscal reforms for the 2027 state budget.
The high-level meeting focused on restructuring the budget to maximize public revenues, enhance spending accuracy, and systematically reduce the state's reliance on oil.
The Iraqi Ministry of Finance is scheduled to finalize the official budget draft by September, with plans to formally transmit the legislation to the Council of Representatives in October for parliamentary approval.
Concurrently, The Kurdistan Region's Ministry of Finance, chaired by Minister Awat Sheikh Janab, held a high-level meeting on Sunday to officially launch preparations for Iraq's 2027 federal budget.
Backed by the latest population census data, KRG is demanding a budgetary share that enables it to cover public salaries, operational costs, and critical infrastructure projects.
The ministry plans to hold individual consultations with all government institutions in the coming days to finalize their specific financial needs and safeguard the Kurdistan Region's constitutional entitlements. https://channel8.com/english/news/63036