On Oct. 22, university professors had protested proposed austerity measures, including significant wage cuts for middle-class government employees.
Haitham al-Jubouri, a member of the parliament’s finance committee, said Sept. 15 that the 2016 budget will cover only the bare necessities, with no room for extraneous expenditures or investments.
Finance Minister Hoshyar Zebari (pictured) announced Oct. 21 that Iraq might borrow from international and Arab banks to make up part of next year’s budget deficit. However, he did not disclose any details about a potential loan or how Iraq would cover payments with no prospects for higher oil prices in the near future.
The most worrisome aspect of Iraq's deteriorating economic situation is that the government does not have a strategy to deal with this crisis. It has taken only temporary steps such as borrowing from foreign institutions or cutting salaries, both of which have exacerbated the problem.
The government must take major steps to resolve the crisis. Possibilities could include diversifying Iraq's income sources, activating the private sector, privatizing the public sector and implementing effective programs to combat rampant corruption.
The government needs to focus more on non-oil income sources, such as religious tourism. Millions of Shiites from Iran, India, Pakistan, the Gulf states and other countries visit Shiite shrines in Iraq. Last year, more than 1 million pilgrims came from Iran alone to Iraq for the Arbaeen pilgrimage.
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