Iraq Faces Budget Cuts

By Omar al-Jaffal for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

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.”

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