In Iraq, Nationwide Pension Panic Ensues

 

Amidst the COVID-19 pandemic, a collapse in global oil prices, and the absence of a well-functioning government, Iraqi pensioners have had to deal with yet another crisis: pension cuts. 

Just three weeks ago, Iraqi Prime Minister Mustafa al-Kadhemi’s cabinet voted to cut salaries and pensions for public employees by 10 percent, sparking public outrage. At first, the Prime Minister clarified that the resolution would only impact higher-level governmental officials. However, this was not the case. When Nisrine Saleh arrived at the bank to withdraw her monthly pension, she noticed that her $920 allowance was nearly $100 short. For many Iraqis like Nisrine, their monthly pension has served as an economic haven in the wake of tumbling oil prices from the global pandemic. 

As the primary source of funding for nearly 90 percent of Iraq’s budget, Oil exports, and their recent drastic price shocks, have left the country in a vulnerable position. The government cut pensions — amongst a plethora of other financial reforms —  in an effort to reduce their monthly operating budget deficit of $5 billion. 

Soon enough, it became apparent that the impact on the budget deficit was nominal compared to the economic strain it imposed on individuals. Compared to last year’s monthly earning average of $6.5 billion, Iraq has only earned $2.9 billion in March, $1.4 billion in April, and $2.9 billion in May. Combined with the monthly $1 billion Iraq needs to pay oil companies, $3.5 billion for salaries, and $1 billion for pensions, it is clear that the cabinet’s decision would by no means save the Iraqi economy. 

Following protests and outcry, the Iraqi parliament voted to reverse the government’s order. It also refused to impose any new taxes that would provide revenue streams to the government. Furthermore, state-run banks have announced that pensioners could pick up the money that was deducted from their previous payment. A member of the Iraqi parliament’s finance commented on the incident saying that everything would be fine and that the government’s policy mistakes should be disregarded. But for the millions of Iraqis whose livelihood was put on the line, is it possible to let such mistakes fly by so frequently?

By Zaid Fattah

Photo Credits: Almada Paper

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