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No pay cuts for public servants and retirees in 2021 budget bill: officials

Iraq’s 2021 budget bill, which has yet to be passed by parliament, has been amended to prevent pay cuts for Iraqi public servants and retirees, according to several officials.

Jamal Kochar, a member of parliament from the Kurdistan Islamic Union (KIU) party, told Rudaw English that only members of parliament, ministers, and other top officials will experience cuts.

There are “no pay cuts and no income tax for employees and retirees in the 2021 budget,” tweeted finance committee member Sadiq Madlul on Saturday.

Parliamentary speaker Muhammad al-Halbousi’s office confirmed the news.

“In regards to the salaries of higher and special ranks, they will receive pay cuts, which has been approved by the finance committee, however the rest of employees will not receive any cuts on their salaries,” read a tweet from the speaker’s office.

On December 21, the Iraqi Council of Ministers approved the 2021 budget bill, sending it to parliament for deliberation.

The first draft had included small pay cuts to employees with a medium sized income.

“The budget bill includes taxes on senior employees, and protection of employees with low or medium wages,” said Iraqi Prime Minister Mustafa al-Kadhimi at the time. “”People with a wage of less than 500,000 dinars have not received any cuts, and people with one million dinar wages will only receive a symbolic cut.”

Officials have announced several slashes to expenditures from the bill to tackle the country’s hefty deficit since its initial submission to parliament.

Sherwan Mirza, a member of the Iraqi parliament who sits on the finance committee, confirmed to Rudaw English late last month that they had reduced total expenditures from 164 trillion dinars to less than 130 trillion in the bill. The parliament’s amendments to the budget have more than halved the projected deficit, he added

“The three presidencies will receive a 40 percent cut in their salaries, and all MPs and ministers will receive a 30 percent cut,” Labor minister Adel al-Rikabi said in December.

On Friday, a member of the finance committee told state media that the three presidencies will have 20 percent of their budget slashed.

Iraq has had an economically woeful 2020, thanks in part to a global crash in the price of oil and the coronavirus pandemic.

Late last year, Baghdad borrowed 12 trillion Iraqi dinars (10 billion USD by then exchange rates) from the central bank in an attempt to cover the fiscal deficit and pay civil sector employees. Initially, Kadhimi had asked the finance committee for 30 trillion dinars ($25 billion USD) – seen as a “waste of money” by some MPs.

Iraq’s central bank announced on December 19 that it would be devaluing the country’s currency in an effort to combat a national liquidity crisis and bring in much-needed cash to the government’s coffers.

Reuters reported on January 25 that Iraq has requested emergency assistance from the International Monetary Fund (IMF) to ease its deficit, a day after Bloomberg quoted the country’s finance minister Ali Allawi saying he was negotiating a $6 billion borrowing package from the body. Source