Iraqi Cabinet Exempts Retirees from Controversial 1% Salary Deduction for Gaza and Lebanon
Sudani’s adviser dismisses concerns over 2026 salaries, calls warnings ‘confusion’
BAGHDAD — Prime Minister Mohammed Shia al-Sudani’s financial adviser, Mazhar Mohammed Saleh, said Iraq’s government is fully capable of securing all public salaries for the next fiscal year, describing claims to the contrary as “confusion.”
Saleh told the state-run Al-Sabah newspaper that “the financial authority began preparing the 2026 budget last July and will submit it to the Council of Representatives once it is completed,” expressing hope that “it will be approved after the parliamentary elections.”
He said the budget “represents a vital element in Iraq’s economic stability,” explaining that government spending accounts for about 50% of the gross domestic product and that more than 85% of economic activity could be affected if the budget is delayed.
Approving the budget on time, he added, “gives the public confidence that the country is stable in terms of investment, employment, and the market.” Saleh confirmed that salaries for employees, retirees, and social protection beneficiaries are “secured for 2026 under the Federal Financial Management Law,” saying that suggestions otherwise are merely “confusion.”
His remarks followed warnings from financial expert Ahmed al-Hadhhal, who said in an Oct. 4 interview with Samarra TV that Iraq could face “serious challenges” in sustaining salary and wage payments in 2026 as domestic debt has risen to more than 92 trillion dinars — about $65.7 billion — and is expected to surpass 100 trillion dinars next year.
Al-Hadhhal said Iraq’s fiscal stability depends heavily on oil prices and warned that “any drop in the price of a barrel below $70 could create a financing gap that threatens the salaries of [public sector] employees, retirees, and social protection networks.”
He noted that the Central Bank holds more than half of Iraq’s domestic debt and described salary coverage as “fragile,” even if oil prices stay near $50 per barrel and non-oil revenues reach 20 trillion dinars (about $14.3 billion). He cautioned that the scenario remains vulnerable to declines in exports or non-oil income, adding that a growing deficit could force the government to devalue the dinar, “which would increase inflation and raise living costs for the most vulnerable groups.”
Debates over Iraq’s ability to sustain its budget surface frequently, as the country relies heavily on oil exports and the price of crude often fluctuates. Oil revenues make up more than 90 percent of government income, leaving public finances exposed to shifts in global energy markets and growing domestic spending obligations.