Iraq struggles to pay public salaries as Strait of Hormuz crisis deepens

Iraq's public employees have reportedly not received their July salaries as the nation grapples with an escalating oil export crisis stemming from the continued closure of the Strait of Hormuz. This situation is severely impacting 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 spends approximately $6.5 billion monthly on salaries, pensions, and social welfare. Plans are reportedly being considered to pay salaries every 45 days, a significant shift from the current schedule. Iraq's oil exports have plummeted from 100 million barrels in February to around 32 million in May and June, according to Oil Ministry figures.

The country's economy, already weakened by years of conflict, had shown signs of improvement, with poverty rates falling. However, the ongoing closure of the Strait of Hormuz threatens this progress. Despite Iran's assurances regarding Iraqi vessels, attacks on oil tankers have occurred. Iraq's economy is heavily reliant on oil, which constitutes 90% of government revenue and over half of its GDP. Although Baghdad has secured a one-year agreement with Turkey for pipeline exports, the disruption has left the country billions of dollars short. In response, Iraq is reportedly offering discounts of nearly $30 a barrel on Basra crude.

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if the export disruption continues, we will not be able to pay salaries in time from now on. We will pay whenever we have cash. Or those who got paid in time for July will be paid late for August.