Iraq MP Jamal Kochar rejects ‘unfounded’ concerns over salary payments as oil prices decline

BAGHDAD — Concerns about the government’s ability to secure employee salaries are “unfounded,” according to Jamal Kochar, a member of the Finance Committee in Iraq’s Parliament.

In an interview with the state-owned Al-Sabah newspaper, Kochar stated, “What is being circulated in the media about not securing employee salaries has no basis in truth.” He added, “The Ministry of Finance is not facing any issues in securing salaries, even if oil prices were to drop, because the salaries are pre-funded. Additionally, the government holds a substantial cash reserve that can be utilized in emergencies.”

Some financial experts, including Mahmoud Dagher, have warned that Iraq’s ability to pay salaries could face serious threats if oil prices fall below $65 per barrel. In an interview with Utv, Dagher cautioned that Iraq could only sustain salary payments for up to six months under such conditions, stressing the need to reassess the salary budget, which has increased to 60 trillion Iraqi dinars, up from 40 trillion dinars two years ago.

Brent crude oil prices have dropped to $71.76 per barrel, their lowest level since November 2021. On September 10, prices briefly fell to $68.90.

Kochar reassured employees that “next year’s salaries are also fully secured” and highlighted the government’s plans to increase financial resources to meet its obligations. He emphasized that the Finance Committee will push ministries to improve their performance and boost their revenue collection, contributing to greater economic stability.

“The government has sufficient resources and financial plans to ensure the continued payment of salaries, which should reassure employees about their financial stability this year and next,” Kochar added.

Iraq, the second-largest producer in OPEC, relies on oil exports for around 90% of its state budget.

Kochar also revealed that the Finance Committee is pressing ministries to enhance tax and revenue collection to reduce reliance on oil revenues. This approach aligns with warnings from the International Monetary Fund, which has urged Iraq to maximize non-oil revenues to avoid future economic crises.

“The Finance Committee will exert pressure on ministries to increase their resources by improving collection,” Kochar said. “As a country with vast land and substantial economic activities, Iraq should have higher tax revenues than other countries.”

He emphasized that “taxes and customs collection are key resources that need to be strengthened,” adding that these revenues will ultimately benefit citizens. He also noted that the committee had met with the General Authority of Customs and the Tax Authority to discuss weak collections and review their plans to boost resources.