Iraq’s President warns of budget strain, calls for private sector growth

Shafaq News/ Iraqi President Abdul Latif Jamal Rashid warned of the mounting strain on the country’s public budget caused by rising operational expenditures, particularly the salaries of public sector employees.

Speaking at the Kurdistan House during the World Economic Forum in Davos, Switzerland, Rashid stressed the importance of bolstering the private sector to drive economic progress.

“Salaries are a critical issue not only for the Kurdistan Region but for all of Iraq, where almost 80% of the national budget is allocated to public sector wages,” Rashid said, highlighting a challenge that has grown as Iraq’s population now stands at 45 million, with 56% born after 2003.

The president expressed concern over the year-on-year increase in operational spending, urging reforms. He also encouraged Kurdish investors to expand their ventures into other parts of Iraq, citing the country’s improved security situation as a conducive environment for investment.

As a solution for monthly payroll demands, Rashid suggested supporting and developing Iraq’s private sector to reduce the pressure on the Kurdistan Regional Government (KRG) and the federal government. “Without fostering private sector growth, neither Kurdistan nor Iraq as a whole will achieve robust economic development,” he warned.

The president’s remarks come as the KRG grapples with delays in funding monthly salaries for its public sector employees, an issue tied to ongoing disputes with Baghdad.

The KRG attributes the delays to the federal government’s failure to release funds regularly. In contrast, Iraq’s federal finance ministry has blamed the KRG for not integrating salary payments into the centralized banking system and for not transferring non-oil revenues to the state treasury.