A NEW FINANCIAL ROADMAP FOR IRAQ: THE SUDANESE GOVERNMENT BEGINS REFORMING SALARIES AND BENEFITS
A NEW FINANCIAL ROADMAP FOR IRAQ: THE SUDANESE GOVERNMENT BEGINS REFORMING SALARIES AND BENEFITS
In a move described as bold and unprecedented, the government of Prime Minister Mohammed Shia al-Sudani is moving towards redrawing the financial map of Iraq by opening one of the most sensitive and complex files: the file of salaries and senior privileges in the state.
The government is putting forward a reform vision aimed at streamlining spending and controlling operational expenses, with a focus on ending special privileges for presidencies and senior ranks, in an attempt to achieve financial justice, protect social stability, and ensure the sustainability of the general budget in light of internal challenges and accelerating global economic fluctuations.
On Monday, Prime Minister Mohammed Shia al-Sudani chaired an extraordinary meeting of the Ministerial Council for the Economy, during which a number of important decisions were made aimed at rationalizing expenditures and maximizing the state’s financial resources.
Regarding spending reduction measures, the Council discussed the allocations and salaries of the three presidencies, and the Prime Minister directed that an urgent review of this file be conducted, and that work be done to equalize the salaries and allowances of all employees of the Presidency of the Republic and the Presidency of the House of Representatives with the employees of the Presidency of the Council of Ministers, in a step aimed at achieving job fairness and reducing financial disparities.
Al-Sudani also directed the relevant committee in the Ministry of Planning to make the necessary update to the report on unifying the salary scale for all state employees, and to take into account the recommendations submitted in this regard.
The council decided to reduce the allocations for state employees’ travel by 90%, and to prohibit it except in cases of extreme necessity and with the approval of the relevant minister, in addition to reducing the rates of supervision and monitoring of new projects.
As part of reforming the social support system, the Council tasked the Minister of Trade with reviewing the ration card and reforming its mechanisms to ensure that it is directed to its actual beneficiaries from the vulnerable classes.
As for the procedures for maximizing revenues, the Prime Minister directed the ministerial committee formed under Cabinet Resolution No. (550) to reconsider the calculation of non-oil revenues in the Kurdistan Region of Iraq, which are currently deposited as a lump sum into the Ministry of Finance’s account, in coordination with the regional government.
The Council also stressed the need to support and enhance the implementation of the pre-declaration system in the Customs Authority in coordination with the Central Bank of Iraq, to strengthen electricity collection, to review the current tariff, and to adopt automation and electronic payment exclusively in all collection operations, especially in the electricity sector, the Baghdad Municipality, and municipalities throughout the country.
A clear roadmap for financial reform
In this regard, the Prime Minister’s Advisor for Financial Affairs, Mazhar Muhammad Salih, affirmed that the meeting of the Ministerial Council for the Economy with Prime Minister Muhammad Shia’ al-Sudani constituted a strategic milestone for setting a clear roadmap for financial reform, confronting the challenges of fluctuating oil prices, and reducing dependence on oil revenues.
Saleh told Al-Eqtisad News in a special statement that the meeting was dedicated to reviewing the reality of fiscal policy in Iraq, and the concept of fiscal consolidation as a tool to address the deficit and reduce the debt gap, especially internal debt, through re-engineering costs and controlling public spending, without resorting to shock measures or harsh economic surgeries, and in a way that preserves social stability.
He added that the Iraqi economy cannot remain dependent on oil revenues in light of global geopolitical fluctuations, noting that operational expenses constitute approximately 70% of total public spending, which necessitates a review of them according to clear and well-thought-out priorities.
Shocking figures
Iraq spends about 100 trillion dinars annually on salaries for employees and retirees, at least 40 trillion of which goes to senior officials.
The 2024 budget amounted to more than 144 trillion dinars, with a deficit exceeding 63 trillion dinars.
In Iraq, there are approximately 6,000 employees out of roughly 4 million who are classified as “special grades,” and this group receives the lion’s share of salaries. Parliament and previous governments attempted to “streamline spending” and establish a “salary scale,” but these efforts failed due to resistance from those holding “high salaries.”
Iraq faces several risks due to its economy’s dependence on “oil,” a commodity that is subject to political and security crises around the world.
The number of job grades for the positions of “Undersecretary” and “Director General” is estimated at more than 500 grades (A) and about 5030 grades (B), a number that exceeds what exists in Britain and America, according to experts.
Employees in Iraq are divided into 10 job grades, in addition to the special grade (A), and they are in positions such as: Undersecretary of a Ministry, Secretary or Advisor in the three presidencies, up to the grade of Ambassador.
The top grade (B) includes the functions of the general manager and senior supervisory tasks, and then the job grades are divided from the tenth sequence down to the first grade.
In addition, there are more than 20 ministers, and more than 300 deputies or undersecretaries, along with the three presidents (of the Republic – Parliament – Ministers), totaling more than 6,000 positions that consume nearly 40% of the state’s total salaries, divided into salaries, allowances, security protections, and travel allowances, according to experts.
Saleh returned to continue his speech, pointing out that “the principle of reform begins from within the state institutions, through reviewing the structure of salaries and privileges, especially in the higher presidencies, as it is a national and social message that confirms the state’s commitment to justice, and consideration of the conditions of the middle and poor classes.”
He explained that “the meeting addressed the existence of clear gaps in public spending and miscalculations in some areas of expenditure, in addition to unjustified support that constitutes a continuous burden on the budget, which requires adopting the principle of reviewing expenditures followed globally, through re-evaluating expenditure items, and deleting or reducing the items that lead to an unjustified expansion in expenditures.”
He explained that the decisions discussed were classified as either measures that could be implemented immediately, or others that required study and gradual implementation, in line with the state’s approach based on gradual reform and avoiding direct economic shocks.
Saleh added that this approach comes as part of early preparations to restructure the 2026 budget, in light of expectations that oil prices will fall to levels that may range between $50 and $60 per barrel, while emphasizing the need to ensure the provision of salaries, wages and pensions as a top priority, without compromising the requirements of development and services.
He stressed that the Iraqi economy has good cash flows, but it needs higher fiscal discipline and more efficient management of resources, to ensure that every dinar is spent in the right way, and to pave the way for a more stable and sustainable economy in the medium and long term.
Accurate financial data
In addition, financial expert Abdul Rahman Al-Sheikhli believes that the recent decisions came in response to accurate financial data aimed at strengthening the state’s financial stability, in light of a relative decline in public revenues compared to rising levels of spending.
He explained that public revenues in the first half of 2025 amounted to about 62 trillion Iraqi dinars, a decrease of nearly 6% compared to the same period of the previous year, with oil revenues declining by 3.4% and non-oil revenues by 14%, which necessitated a review of financial policies in line with these changes.
Al-Sheikhly explained that the Iraqi economy still relies heavily on oil as a primary source of revenue, with oil revenues reaching approximately 56.7 trillion dinars, equivalent to 91% of total revenues, compared to only about 6.2 trillion dinars from non-oil revenues during the first half of the year.
He stressed that these indicators highlight the importance of diversifying income sources and enhancing the flexibility of the general budget in the face of fluctuations in global oil prices.
The financial expert pointed out that the measures taken reflect a reformist approach to address a number of challenges, including high current spending, particularly salaries and wages which account for a large share of public expenditures, in addition to limited investment spending.
He pointed out that rebalancing operational and investment spending is an important step towards supporting sustainable economic growth and enhancing resource management efficiency.
Al-Sheikhli explained that these measures have potential positive effects, most notably improving public finance management and reducing the budget deficit by rationalizing unnecessary operational expenses and directing support to those who actually deserve it, especially with the development of the ration card system and support for the most needy groups.
He also stressed that strengthening electricity collection and expanding reliance on electronic payment systems will contribute to increasing local revenues and raising collection efficiency.
Sheikhly stressed the importance of implementing these steps wisely and with balance, ensuring the maintenance of public services and the continuation of investment projects, while simultaneously working to develop non-oil revenues and encourage investment in productive sectors. He emphasized that the success of these measures requires effective oversight and close cooperation among various state institutions to achieve the desired objectives without imposing additional burdens on citizens.
Al-Sheikhli concluded his remarks by emphasizing that proceeding with these financial reforms has become an urgent necessity to strengthen the resilience of public finances and reduce the deficit gap, noting that these measures represent a real opportunity to lay more stable and sustainable foundations for the general budget, and reduce its vulnerability to fluctuations in oil prices and changes in production and exports.
No previous government has dared to amend the salaries of the three presidencies, not due to a lack of conviction in the necessity of doing so, but rather because of the political complexities and high sensitivity surrounding this issue. Such attempts were typically met with unspoken resistance and behind-the-scenes political pressure exerted by influential forces.
Any move in this direction would be fraught with political risks and could open the door to conflict between influential blocs and parties.
This issue was also viewed as a “red line” that was difficult to approach, for fear of it being exploited politically or interpreted as targeting a particular site or institution. This prompted successive governments to avoid getting involved in it, and to be content with talking about reform without translating that into practical decisions.
However, raising this issue today reflects a shift in the reform discourse, an attempt to break the deadlock in files that have remained unresolved for many years, and to convey the message that financial reform must begin from the top before the base, in a way that enhances public confidence and affirms the principle of fairness in the distribution of burdens, especially in light of the current economic challenges.