Low oil prices: Iraq’s new govt faces tough times – Saudi Gazette

Low oil prices: Iraq’s new govt faces tough times – Saudi Gazette

Iraqi Prime Minister-designate Mustafa Al-Kadhimi delivers a speech during the vote on the new government at the parliament headquarters in Baghdad.. Experts say that if oil prices remain low, the government will have to slash salaries of public sector employees - that make up a significant portion of its labor force - or dig deep into its foreign reserves and seek the support of foreign donors.. With oil prices low, Mshadani said that an increase to state budget would produce an even larger deficit.. In early April, the Financial Times reported that Iraqi Prime Minister designate Adnan Zurfi warned that the oil price collapse meant the government could be unable to pay half of its public sector salaries.. Unlike Gulf countries, Iraq does not have a large investment budget that it can slash to reduce spending, and will have to cut public sector salaries and benefits instead," said Tabaqchali.A second option will be to dig deep in the central bank foreign reserves, estimated by Mashadani at round $70 billion, although other estimates put them closer to $65 billion..