The Iraqi economy: US pressure and a liquidity crisis threaten financial stability.
Worrying indicators show the fragility of the Iraqi economy, with escalating external pressures and fluctuating oil prices, in parallel with an internal liquidity crisis that has begun to affect salaries and markets.
At a time when Iraq faces complex political and economic challenges, alarming indicators of a fragile financial situation are mounting, amidst ongoing US pressure, sharp fluctuations in oil prices, and a domestic liquidity crisis that is beginning to directly impact the lives of citizens and local markets. These factors combined are putting the Iraqi economy to a difficult test and raising serious questions about the government's ability to contain the repercussions and maintain economic stability in the coming period.
In this context, economist Bassem Anton stressed that Iraq is subjected to multi-dimensional pressures, in which political and economic considerations are intertwined, noting that these pressures are used to achieve gains related to sensitive regional issues, most notably the Palestinian issue, the Iranian file, and the power struggles in the region.
Anton explained that the United States adopts an approach of pressure, threats, and then gradual retreat as part of managing its political interests, indicating that Iraq is still unable to draw clear paths to deal with these pressures in a way that protects its economy.
He added that a drop in oil prices to levels that could reach $45 a barrel, in the event that the markets are flooded with Venezuelan oil, will directly affect the Iraqi economy, noting that the general budget depends on oil revenues by nearly 90%, which means a possible deficit in the implementation of projects, disruption of reconstruction plans, and exacerbation of service problems.
Employee salaries
In parallel, economist Mustafa Al-Faraj warned that the continued delay in paying the salaries of employees and retirees is a dangerous indicator of a severe liquidity crisis that could lead to a gradual paralysis of local markets.
Al-Faraj explained that more than 60% of consumer activity in Iraq depends on a fixed monthly income, stressing that any delay in salaries immediately affects purchasing power and leads to a recession that begins with non-essential goods before extending to food items.
He pointed out that the repercussions of the crisis are not limited to citizens , but also put pressure on traders and small business owners, and lead to a slowdown in the cash cycle, which negatively affects tax revenues and commercial activity in general.
Al-Faraj linked the salary delay crisis to the increasing financial deficit, explaining that internal debts exceeded 80 trillion dinars, and warning of a monthly liquidity crisis if the structural imbalance in public finances is not addressed.
He stressed that the solution lies in real reforms that include reducing unnecessary expenditures, reviewing the salaries and allowances of senior officials, and controlling public spending, in order to ensure the sustainability of salaries and market stability.
Between external pressures controlling oil prices and an internal liquidity crisis threatening the regularity of salary payments, the Iraqi economy faces complex challenges that require bold decisions and urgent reforms. Continued over-reliance on oil and the postponement of financial solutions portend deeper repercussions that could affect economic and social stability, compelling the government to act swiftly to avert a recession that will be difficult to contain in the future. link