Iraq’s government is facing a serious challenge when it comes to paying salaries and pensions, according to Prime Minister’s financial advisor Mazhar Mohammed Salih.
Speaking on Saturday, Salih said the government is currently depending on whatever resources it can collect each month to cover payments for employees and retirees. He stressed that the situation is difficult and that some of the ideas being discussed are not practical solutions.
One of those ideas is using a “digital dinar” to deal with the cash shortage. Salih said this is not a realistic option for solving the current crisis.
He explained that the government and the Ministry of Finance cannot simply borrow money inside the country or take funds directly from Iraq’s cash reserves. According to him, doing so would go against the Central Bank Law, which prevents the government from withdrawing or borrowing money in that way.
Salih also said that external borrowing remains one of the few available options, but it comes with a major downside. Loans from outside sources can be expensive and would add more financial pressure on the country because of high interest costs.
Despite the challenges, Salih pointed to some positive signs. He said current political and security developments suggest that regular oil exports could resume soon through the Strait of Hormuz. If that happens, it could help ease the financial pressure and improve government revenues.
His comments came after Saad al-Awadi, deputy head of the National Approach parliamentary bloc, suggested using a digital dinar to ensure salaries and pensions are paid during the ongoing liquidity crisis.
For now, the government continues to search for practical ways to secure salary and pension payments while dealing with limited financial resources.
