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Government agencies: Salaries are insured and there is no shortage of liquidity
Economical 02/26/2024
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Baghdad: Haider Falih Al-Rubaie
The financial and monetary “authorities” in Iraq denied the existence of any liquidity problem, stressing that employees’ salaries were fully secured, without any obstacles. While the Ministry of Finance expressed its surprise at what it described as “allegations” of a lack of liquidity, it announced that employees’ salaries, the social protection network, and retirees would be secured without delay. Or delay, at a time when the Central Bank confirmed that what is being raised and rumored about the existence of a problem with the dinar’s liquidity is untrue.
Although the financial and monetary authorities have confirmed that there is no shortage of liquidity and that the salaries of employees, retirees, and those covered by the protection network system are fully secured, economic affairs specialists believe that the repeated delay in distributing financial dues has paved the way for these “allegations” and caused financial confusion. In the family, in addition to causing a kind of stagnation in the markets as a result of the lack of funding among the employees’ families.
In the midst of this, a specialized economic center monitored price increases from the beginning of the year 2020 until the beginning of the current year 2024, confirming an increase in the costs of goods and services by 18% according to price data issued by the Ministry of Planning (the Central Bureau of Statistics), indicating at the same time an increase in the prices of goods. Important and essential for the citizen by more than 30%, led by meat, which rose by 36% compared to 2020. Fish prices also increased by 38%, in addition to health services and transportation services, which rose by more than 25%.
The Ministry of Finance said in a press statement: “We are surprised by the claims of some political and media figures regarding the lack of sufficient cash liquidity to secure the salaries of state employees,” indicating that “the financial plans that it prepared within the government program for public spending included taking several procedures and measures that are consistent with what was stated in the law.” Federal Financial Administration No. (6) of 2019 amended and Federal General Budget Law No. (13) of 2023 and the application of the unified treasury system, by completing the budget schedules for the fiscal years 2024 and 2025 and submitting them to the Council of Ministers for approval, thus securing employee salaries, the social protection network, and salaries. Retirees without delay or delay through its retained cash balances for the previous year and its oil and non-oil revenues.”
The Ministry indicated that it “committed to securing salary funding on an ongoing basis and directing the resumption of official working hours on Fridays and Saturdays for the purpose of completing the distribution of salaries of state employees without delay,” noting that “the financial and economic reform plan pursued by the government led to a noticeable increase in economic growth, and achieved a significant resource.” "A significant amount of the state's resources through the increase in development projects and the restart of a number of suspended factories, especially food and construction factories, as the production rate increased in several projects within the framework of the development vision for the Iraqi economy, diversifying it, reducing dependence on oil revenues as the sole source of the budget, and maximizing non-oil revenues." .
In confirmation of what was announced by the Ministry of Finance, the Governor of the Central Bank, Ali Al-Alaq, denied that there was a problem with the liquidity of the Iraqi dinar.
Al-Alaq said in a statement to the Iraqi News Agency (INA): “What is being raised and rumored about the existence of a problem with the liquidity of the Iraqi dinar is untrue, and the Central Bank is continuing to conduct the process of responding to requests related to liquidity, as well as the Ministry of Finance.”
In turn, the economic expert, Dr. Ali Daadoush, said during his speech to “Al-Sabah” that there are two main points that could be caused by the process of delaying the distribution of employee salaries beyond its scheduled date, as the first affects the local market, while the second reflects negatively on individuals.
Daadoush stated that any delay in distributing the salaries of employees or retirees opens the way for “plaintiffs” who try to confuse the financial situation, in addition to causing the obstruction of the payment of the financial obligations incurred by the employees, retirees, and their families, especially rents, school tuition, or delay in securing insurance. Necessary goods and materials, in addition to the possibility of health repercussions resulting from delays in acquiring medicines or medical visits due to not receiving salaries on time.
Daadoush also points out the existence of an economic disruption that could be caused by the delay in distributing salaries, which is represented by a state of contraction in the local markets, and thus another harm will be borne by workers in the private sector who will suffer from a significant decline in purchases resulting from the lack of liquidity among employees. The researcher in economic affairs, Bassam Raad, did not stray far from the previous opinion, when he confirmed to “Al-Sabah” that “the process of delaying in completing the requirements for distributing employee salaries can leave a psychological and economic impact on the individual, especially since salaries constitute a kind of positive support for the movement of drivers.” ". Raad explained that “the Ministry of Finance has sufficient liquidity to finance employee salaries according to monthly financing schedules, and that the financial situation in the country is currently witnessing stability supported by abundant oil revenues as a result of the rise in oil prices to more than $80 per barrel,” noting at the same time that “the bank The Central Bank currently has good dollar reserves.
Researcher Raad pointed out that "the delay of some public agencies in completing the financing requirements for their employees, or the occurrence of technical or administrative obstacles in disbursing salaries for limited days, is due to reasons not related to the financial situation of the country, as Iraq has good monetary stability."
In a related context, the head of the Future Iraq Foundation, the economic expert, Manar Al-Obaidi, confirmed that “since the beginning of the year 2020 until the beginning of the current year 2024, the prices of goods and services in Iraq have increased by 18%, according to price data issued by the Ministry of Planning and the Central Bureau of Statistics.”
Al-Obaidi pointed out that “important and basic commodities in the citizen’s life witnessed an increase in prices amounting to more than 30%, led by meat, which rose by 36% compared to 2020. Fish prices also increased by 38%, as well as dairy by 30%, in addition to health services and transportation services that... They witnessed a significant increase of more than 25% for both services.”
The spokesman pointed out that "the services with the least increase in prices were rents throughout Iraq, which only increased by 2%, as well as non-alcoholic drinks, which only increased by 9%," indicating that "despite these increases, the government did not take into account the inflation rates occurring in prices across the country." Extension of the past years for the employee sector despite the adoption of the Civil Service Law requiring that the salaries of public employees be adjusted depending on the inflation rates occurring in the country.”
Al-Obaidi expected that “inflation rates will continue to rise, especially with the rise in the costs of international supply chains in addition to climate changes that affect a wide sector of food commodities,” noting at the same time that, despite these increases in inflation rates over four years, they are... The least compared to other neighboring and global countries.
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