Will Stalled Wage Reforms Impact IMF Deal?

The IMFs new three-year program provides for additional funding for Iraq as it struggles to fund its budget. It also comes with proposed “economic and fiscal policies that will bring spending in line…” Implementation would undoubtedly benefit Iraq but will be far from straightforward given the country’s fragile-to-dysfunctional political system (see p12).

Arguably the biggest impediment is public sector pay reform, or rather the lack of it. Civil service pay accounts for the lion’s share of budget spending. But government reform efforts on this have fallen short. A first attempt was made last October. Yet protests began after the cabinet passed a bill on 13 October which made substantial, yet then unspecified, reductions in salary levels for the brackets occupied by professionally-qualified civil servants.


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