Iraq delays July public salaries as Strait of Hormuz blockade guts oil revenue

Iraq is grappling with a significant financial strain, leading to reports that many public employees have not received their July salaries. The crisis stems from a sharp decline in oil exports, a critical revenue source for the country, exacerbated by the ongoing closure of the Strait of Hormuz.

According to figures provided by Iraq's Oil Ministry, the nation's oil exports have fallen dramatically, from 100 million barrels in February to approximately 32 million barrels in May and June. This drastic reduction directly impacts the government's ability to meet its financial obligations. A senior Finance Ministry official indicated that if the export disruption persists, timely salary payments will become impossible. The ministry is exploring options such as paying salaries every 45 days, a move that could undermine recent improvements in poverty reduction, which saw the Multidimensional Poverty Index decrease from 23% to 17.5% over three years.

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if the export disruption continues, we will not be able to pay salaries in time from now on.

Iraq's economy is overwhelmingly dependent on oil, which constitutes 90% of government revenue, 95% of export earnings, and over 53% of the country's GDP. Despite efforts to mitigate the impact, including a transit agreement with Turkey for exports through the Iraq-Turkey pipeline, the country faces billions of dollars in revenue shortfalls due to the blockade.

While Iran has reportedly promised exemptions for Iraqi vessels, the conflict in the Strait of Hormuz has seen vessels targeted. In mid-March, Iranian drone boats entered Iraqi waters and attacked ships carrying Iraqi fuel cargoes. This situation highlights the vulnerability of Iraq's oil-dependent economy to regional instability and disruptions in vital shipping lanes.

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We will pay whenever we have cash. Or those who got paid in time for July will be paid late for August.