Iraq is running out of money to pay the salaries of millions of public sector employees, with Minister for Finance, Ali Abdul-Amir Allawi saying pay-outs in October were conditional on the House of Representatives’ approving a loan.
Parliament’s Finance Committee shot back, warning the country was on the verge of bankruptcy.
In an internal document seen by journalists the committee said that unless the Government agreed on economic and financial reforms “Iraq will have to declare bankruptcy within six months”.
Since 2003, Iraq has relied on oil revenues to run State affairs. However, these have slumped in recent months, reflecting a glut on world markets.
At the same time, with the collapse of the country’s private sector, hiring in the public sector has grown to the point where it is practically the only source of employment for millions of Iraqis.
The Government does not release official figures for the number of employees receiving fixed monthly salaries in the public sector, but unofficial estimates say that about eight million citizens, including civilian workers, security and military personnel, retirees and the unemployed, receive money from the State ranging from $US400 to $US3,000 ($A560 to $A4,200) per month.
Most September salaries have yet to be paid, while unofficial figures showed a deficit of about $US1.5 billion ($A2.1 billion) in the salary budget as oil revenues for last month could not cover more than two-thirds of the required amount.
To remedy the situation, the Government has been turning to internal borrowing, in effect drawing on reserves in the Central Bank. However, every individual loan needs the approval of Parliament.
Parliament is expected to convene within the next few days to approve another loan as the prospects of millions of impoverished Public Servants and others pouring onto the streets is too terrible to contemplate.
Baghdad, 7 October 2020
