Iraq spent nine-tenths of its first-half budget on salaries as revenue fell 42%

Ministry of Finance data for 1 January to 30 June 2026, reported via EPIC’s ISHM 556, put total expenditure at IQD 54.6 trillion, of which more than IQD 48.7 trillion went to salaries, pensions and social security — roughly 89 percent of all spending, a figure derived from the ministry’s own totals rather than published as such. The deficit through end-June exceeded IQD 18.7 trillion. Revenue was down 42 percent against the same period of 2025, when the ministry reported more than IQD 62 trillion. The cause is visible upstream: Al Jazeera reported on 1 August that Iraqi oil exports fell more than 80 percent in the weeks after the 28 February US and Israeli strikes on Iran, and that monthly oil revenue dropped from around $6bn to under $2bn.

The export architecture rebuilt since then rests on short paper and a contradiction. Iraq and Türkiye signed a one-year deal on 1 August to keep Kirkuk–Ceyhan running past the expiry of the old pipeline agreement, with Oil Minister Bassem Mohammed Khudair al-Abadi saying the term covers negotiation of a broader energy, water and trade framework. On 12 August, SOMO director Ali Nizar said on the record that the tripartite agreement between Baghdad, Erbil and the operating companies — first signed in September 2025 — had been renewed “for another year”. On 21 August the specialist trade publication MEES reported the same renewal but with an international oil company executive saying it runs only to 27 January. Either the two instruments are being conflated or one account is wrong; a five-month clock expiring inside budget season is a different country from a twelve-month one.

The same shortfall is metered in the grid. Electricity Minister Ali Waheeb met representatives of Excelerate Energy in Baghdad on 24 August to press for faster delivery of the offshore gas import platform contracted in October 2025 for $450m, originally due to operate by mid-2026 and delayed by the war, according to state news agency INA as carried by AGBI. Iranian gas once supplied 50 million cubic metres a day and generated nearly 40 percent of Iraqi power; volumes have fallen on Iranian domestic demand and Baghdad’s accumulated arrears to Tehran. Iraqi electricity officials cited by ISHM in late July put available generation at 21,600 MW against peak demand near 55,000 MW, with most provinces receiving six to ten hours a day. At least five civilians were injured on 21 July when forces dispersed electricity protests in Najaf.

Assessment: A state that spends 89 percent of its outlays on people it pays cannot credibly threaten the payrolls of armed groups, which is why the fiscal table and the disarmament deadline are one story. PMF salaries are payroll; cutting them is a budget act with a security consequence, and there is no fiscal room to buy the factions out. Watch the January date rather than the August one: if MEES is right, the Kurdistan export renewal expires alongside budget negotiations and whatever follows 30 September. The percentages here are derived from ministry totals reported second-hand through a tracker and want checking against the Finance Ministry’s monthly tables before anyone builds a forecast on them.