Crisis management expert Ali al-Fariji said on Thursday that Iraq is facing a serious liquidity crisis, warning that the solutions currently being discussed are only temporary measures and do not address the underlying problem.
Al-Fariji said the delay in paying government employees’ salaries should not be seen as a simple administrative issue. According to him, the situation is closely linked to declining oil revenues, which have been affected by recent developments in the region, particularly disruptions related to the Strait of Hormuz.
He explained that while the government has options to secure salaries in the short term, most of these measures are temporary. These include managing available liquidity, adjusting spending priorities, making limited use of domestic borrowing, and delaying non-essential expenses.
However, he stressed that such steps can only solve immediate funding needs and will not fix the broader problem if oil revenues continue to decline.
Al-Fariji noted that the situation in the Strait of Hormuz has significantly affected Iraq’s oil exports and cash income since March. He said monthly oil revenues have, at times, fallen to around $2 billion to $2.5 billion, compared with more than $6 billion during normal periods.
According to him, this decline has reduced the country’s cash flow by billions of dollars each month, leading to substantial financial losses over time.
He emphasized that the salary issue is a result of the wider financial challenge rather than the main problem itself. He believes the government can quickly introduce an emergency plan to ensure salaries are paid and essential services continue without disruption.
Looking ahead, Al-Fariji said Iraq must focus on long-term solutions. These include increasing oil exports through routes that do not rely on the Strait of Hormuz and taking stronger steps to boost non-oil sources of revenue. He argued that addressing these issues is essential for reducing the country’s dependence on oil income and preventing similar crises in the future.
