Desperate measures: Iraq uses escrow funds to pay wages

Shafaq News/ Iraq is facing a severe liquidity crisis that could delay public sector salaries and lead to the cancellation of the 2025 federal budget, officials and lawmakers warned on Saturday.

Thaeer Mukheef, a lawmaker from the State of Law coalition, revealed that the government’s cash flow was “severely constrained,” confirming that funds held in tax escrow accounts had been tapped to pay salaries. He defended the move as “legal and necessary to avoid unrest over delayed wages.”

The Finance Ministry acknowledged withdrawals from state-run Al-Rafidain and Al-Rasheed banks but stressed that only sovereign accounts were accessed. In a statement, it rejected claims that public deposits or insured balances were touched, describing the transactions as “routine fiscal reallocations” permitted under the federal budget law.

Separately, a government source said the Cabinet is considering scrapping the 2025 budget altogether due to a widening fiscal deficit. Finance Minister Taif Sami reportedly told ministers that oil revenues were insufficient to cover anticipated spending.

“The draft has not been formally submitted, but the revenue gap is substantial,” the source added, adding that certain personnel entitlements—such as promotions and allowances—could still be issued through executive decrees.

Jamal Kocher, a member of the parliamentary finance committee, warned that the budget’s baseline assumption of $70 per barrel of oil could prove untenable. “If crude drops below $60 and no revisions are made, salaries alone may consume the entire revenuestream.”