Iraq's liquidity crisis threatens public sector salaries and pensions

Shafaq News- Baghdad

Iraq’s financial resources are no longer sufficient to secure public sector salaries and pensions, informed sources told Shafaq News on Sunday, as the government withdrew about $18B from official banks.

The sources noted that the Iraqi cabinet withdrew nearly 20 trillion Iraqi dinars (approximately $13.2B) from Rafidain Bank, between 7 and 8 trillion dinars ($4.6–5.3 billion) from Rasheed Bank, and about $7 billion from another bank. Additional funds were also drawn from the industrial and agricultural banks to finance salary payments in recent months.

These measures have significantly depleted liquidity in state-owned banks and increased the likelihood of payment delays unless urgent financial solutions are implemented. “The crisis could further strain Iraq’s fragile finances, particularly amid mounting concerns over mismanagement, waste of public funds, and suspected irregularities in certain issues,” they said, pointing to the need for urgent reform measures to safeguard financial stability and ensure the timely disbursement of salaries and pensions.

Since December, Iraq’s state-owned banks, particularly Rafidain and Rasheed, have suspended government lending programs due to declining liquidity and weak credit planning, informed sources previously told Shafaq News. The disruption coincided with delayed salary disbursements earlier this year, fueling public concern over the government’s ability to sustain payroll obligations amid mounting fiscal pressure and reliance on short-term liquidity measures.

Read more: Liquidity shortage delays Iraqi salaries: Experts warn of prolonged financial strain