Delaying salaries.. Warnings of a “crisis” after two months and the government reassures

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[size=52]Delaying salaries.. Warnings of a “crisis” after two months and the government reassures[/size]

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2024-09-14
Baghdad
The issue of delaying the payment of salaries to state employees is still a matter of concern and controversy in economic circles, despite the remoteness of the financial danger, but an economic expert warned of a crisis that may explode after two months or more due to the decline in oil prices and the reduction of its exports. While a government advisor downplayed the crisis, a legal expert spoke about the employee’s right to resort to the administrative judiciary in the event of a delay in receiving his dues.[/size]
[size=45]Economic expert Nabil Al-Marsoumi said during an interview, “The issue of providing salaries is still under control, and even if there is a delay, it is limited, and it is mostly related to the Ministry of Electricity only due to special circumstances and pending procedures with the Ministry of Finance.”[/size]
[size=45]But Al-Marsoumi added, “The problem of salaries may appear after two months, as we will suffer a liquidity crisis due to the decline in oil prices and the decrease in the volume of oil exports, and this may lead to a crisis in the availability of the Iraqi dinar, as the government may not have the dinar needed to cover public spending, including salaries.”[/size]
[size=45]Regarding the delay in salaries, he confirms that “this is due to the delivery of salaries at the end of each month, but the delay until the beginning of the new month is a different matter,” noting that “the delay may occur significantly in the future, if the conditions of the oil market remain the same, and we may return to the year 2020 when salaries were paid every 40 days.”[/size]
[size=45]He stressed that “talking about solutions should be in times of abundance, as Iraq is supposed to have a sovereign fund that it can use as a buffer in times of crisis. Revenues should also be diversified, public expenditures controlled, and the lack of rationalization in public finances reduced. However, it seems that Iraq does not learn from previous experiences, and continues to deal with the economy poorly.”[/size]
[size=45]He concludes that “relying on oil is a high-risk policy, as oil is a volatile world and its market experiences waves of rise followed by waves of decline, and we may see a wave of decline in prices, especially if geopolitical crises such as the war in Gaza and the Russian-Ukrainian war calm down.”[/size]
[size=45]In recent months, there has been a delay in paying employees’ salaries, especially the Ministry of Electricity, which has caused discontent and anxiety, and led to demonstrations in various governorates and a strike.[/size]
[size=45]Yesterday, Friday, committee member Mustafa Al-Karaawi, a member of the parliamentary finance committee, said, “The ministry confirmed that salaries are fully secured. There may be some delays from time to time for some institutions, but salaries are secured.”[/size]
[size=45]The committee had previously confirmed that Iraq is going through a major and serious challenge related to financial liquidity, and indicated that the delay in employees receiving their salaries by ten days after the specified date means that the Ministry of Finance does not have sufficient cash to finance the ministries and state institutions.[/size]
[size=45]For his part, the government’s financial advisor, Mazhar Muhammad Salih, commented during an interview with “Al-Alam Al-Jadeed” that “the government pays special attention to salaries. As is known, the number of government salary recipients exceeds four million employees working in the state, and according to the support system adopted in Iraq, the responsibility of each employee becomes, on average, covering the living expenses of five people from his family, which means that more than 20 million Iraqi citizens live on the system of government salaries, wages and grants.”[/size]
[size=45]Saleh said, “The principles on which Iraqi financial policy is based take into account the priority of the safety of the citizen and maintaining the sustainability of his livelihood in general and the employee segment in particular. Accordingly, the priority of the sustainability of the monthly salary system in public expenditures is undoubtedly supported by a food security system that provides food baskets to meet the needs of 40 million Iraqi citizens on a regular monthly basis.”[/size]
[size=45]He points out that “these mechanisms that support the stability of the standard of living express the essence of the philosophy of public finance in constructing its priorities when designing annual budgets, where the stability of citizens’ living conditions is at the forefront as a first priority,” denying “the rumors and speculations in discussing this sensitive issue, as the government’s salary policy is fixed in the regularity of its payments at all times.”[/size]
[size=45]Three days ago, Salih warned that Iraq could face a budget crisis in 2025 due to the decline in oil prices, the country’s main source of revenue. He spoke in an interview with Reuters about the absence of major problems in 2024, “but we need stricter financial discipline in 2025.”[/size]
[size=45]Iraq, OPEC's second-largest oil producer, relies heavily on oil revenues.[/size]
[size=45]In addition, legal expert Adnan Al-Sharifi, during an interview with “Al-Alam Al-Jadeed”, finds that “salaries are an entitlement whose timing cannot be tampered with, and an employee whose salary is delayed can resort to the Administrative Court for any delay in the salary.”[/size]
[size=45]Regarding the possibility of winning the complaint, especially since the timing of salaries is not specified, Al-Sharifi adds, “The right to resort to the administrative judiciary is guaranteed if the evidence is present. The legal rule states that what is known by custom is like what is stipulated by a condition, and what is known is that salaries are paid every thirty days, and although they did not specify a specific day for distributing salaries, they specified the entitlement every thirty days.”[/size]
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