2026-01-29T22:23:34+00:00
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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.
Read more: Iraq can fund salaries, but oil sets the limits
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.
Read more: Oil revenue volatility exposes Iraq’s budget vulnerabilities
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.
Read more: Iraq’s economic “perfect storm”: Experts warn the crisis is structural and social
Written and edited by Shafaq News staff.
