Press reports confirmed that the resigning Iraqi government can no longer escape from the battle of the massive shortage of financial resources after the collapse of oil prices, at a time when its spending needs are increasing due to the repercussions of the emerging Coronavirus.
Reports highlighted that Iraq relies almost entirely on oil revenues to finance its annual budget, the bulk of which is spent on the salaries of nearly seven million people who receive monthly payments from the government, including civil and military personnel, retirees, the unemployed, and other segments of the population.
Estimates are inconsistent with regard to the minimum amount of money that must be obtained by Iraq to cover the salaries of employees or part of it, with some basic needs, so the figures are not clear in Baghdad, but the deficit will inevitably be significant.
The most optimistic estimates are those that indicate that Iraq will be able to secure about a third of the salaries of its employees by the end of April if oil prices continue at their current rates.
Among the most controversial proposals in the context of Baghdad’s efforts to contain this crisis, a proposal is made to print a currency for internal circulation to cover the expected deficit in the salaries of employees.
Experts say that all the solutions needed to face the big financial crisis will not succeed, unless spending on salary financing is reduced, which is the aspect that takes up the bulk of government budget spending.
However, such a measure could spark popular protests, given that employee salaries are almost the only outlet for stirring the internal economic cycle, and any threat to it will cause a major recession, and exacerbate poverty and unemployment rates in the country.
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