Iraq faces budget cuts

Author Omar al-Jaffal Posted December 2, 2014
Translator(s)Pascale el Khoury

Sana al-Khafaji, an employee in Iraq’s Ministry of Construction and Housing, was surprised by the $100 deduction from her monthly salary paid by the Iraqi government, following news about an expected government austerity plan to be adopted by Haider al-Abadi’s government to reduce the waste of public funds and compensate for the substantial expenditures of the previous government.

The state of austerity that Iraq is about to face is also caused by a drop in crude oil prices and the multifront war against the Islamic State (IS) in several provinces north and west of Baghdad.

In an interview with Al-Monitor, Khafaji predicted an [even] higher salary deduction. “This is what we hear every day,” she said, but the deduction from her salary was made on the amount received as a bonus and not from her fixed basic income.

Rumors are being spread across Iraq that the continuation of the war on IS will surely lead to a salary deduction of government officials who make up around 4 million public employees. This will also result in a hiring freeze of new employees.

However, the economic adviser to Prime Minister Haider al-Abadi, Mazhar Mohammed Saleh, denied any knowledge of salary cuts of civil servants in the ministries.

Saleh told Al-Monitor, “The implementation of an austerity plan will not be easy to interpret and we cannot foretell the situation in a short period.”

The news relayed by Saleh confirmed that the upcoming austerity plan will not affect the salaries of state employees. “Austerity measures will not affect the salaries of government employees, the army and police security forces and the popular mobilization forces,” he said.

Saleh, who was newly appointed to his position, said that the government will reprioritize its expenses as it now faces low oil prices and the war with IS.

The drop of the price of oil to $77.83 per barrel was accompanied by increased spending on the war led by the Iraqi government against the extremist organization that took over one-third of the country.

The International Monetary Fund expected in October that Iraq's economy would witness a 2.7% recession this year due to IS’ expansion, which may be the first recession witnessed in the country since its occupation by US forces in 2003.

Saleh, however, downplayed the matter, and said, “Iraq is not witnessing real austerity measures but the government is cutting down the waste of money in its operating and investment budgets.”

Iraq's parliament has yet to approve the general budget for 2014 following a diverging dispute between the political blocs, in particular the prominent dispute over oil exports between the central government and Iraqi Kurdistan.

For his part, Ahmed Hama Rashid, a Kurdish member of parliament and member of the Iraqi parliamentary finance committee, denied the implementation of austerity measures in Iraq. He told Al-Monitor over the phone, “Implementing austerity measures must be discussed in parliament and the government has not yet called for such talks.”

However, Rashid said, “The finance committee will call for discussing the austerity plan in the coming weeks." He refrained from stating the amount allocated to defense spending out of discretion, but hinted that the cost may trouble the economic situation in the country.

He asserted that any austerity plans would not include the salaries of ordinary government employees, stressing that the plan must include the salaries of the three presidencies — the president of the republic, the prime minister and the head of parliament.

http://www.al-monitor.com/pulse/originals/2014/12/iraq-austerity-measures-war.html#ixzz3Kx0yQ7A5