Iraq’s wage and welfare bill now exceeds all federal revenue, and every open file runs through it

Federal Ministry of Finance data for 1 January to 30 June, reported by Shafaq News in early September, put salaries and social welfare at 44.627 trillion dinars, or $34.1bn — roughly 82% of total federal spending of 54.673tn ($41.7bn). Employee compensation accounted for 30.769tn ($23.5bn) and social welfare for 13.858tn ($10.6bn), an average of 7.438tn ($5.68bn) a month. Total revenue over the same six months was 35.946tn ($27.4bn), meaning the wage-and-welfare bill alone exceeded everything the state took in by 8.681tn ($6.63bn). Oil supplied about 79% of revenue. Shafaq cited a 2026 IMF technical report calling for a reduced public wage bill and higher non-oil revenue. The shock behind those numbers is dated: after US-Israeli strikes on Iran began on 28 February, Iraqi oil exports fell by more than 80% and monthly oil revenues dropped from around $6bn to under $2bn, Al Jazeera reported on 1 August.

The compensating pipeline has not delivered what was planned. Kirkuk crude resumed flowing to Ceyhan on 18 March at 250,000 barrels per day, the first time since March 2023, after Baghdad threatened legal action against the Kurdistan Regional Government and parliament passed an eight-point resolution requiring enforcement of federal oil and customs policy, according to The National and the EPIC Iraq Security and Humanitarian Monitor. Exports rose to 340,000 bpd in April after North Oil Company installed booster pumps at the K1 facility, Iraqi News reported. On 2 June the cabinet approved a plan to reach 770,000 bpd within two and a half months, Bloomberg reported — a horizon that expired in mid-August. When Türkiye and Iraq signed a one-year pipeline agreement on 1 August, Al Jazeera reported the line was carrying only about 170,000 bpd against 1.5m bpd of capacity, citing Turkish data.

The same ledger drives the two distributional fights. The KRG Council of Ministers, at its first meeting of the year on 14 January, demanded November and December 2025 salaries plus arrears from 2023 and 2024, saying there is “no legal or constitutional basis for withholding these payments” — a KRG statement carried by the KRG’s own broadcaster, Kurdistan24. In June the Arab Weekly reported that the KRG finance ministry’s General Directorate of Accounts called demands to suspend or deduct Kurdistan salaries “surprising,” and said Kurdistan employees were funded for only ten of twelve months in 2025 while salaries elsewhere were paid in full. On 13 August, wounded Popular Mobilisation Forces personnel and families of the dead staged a sit-in outside the National Pension Authority in Baghdad demanding overdue benefits and parity with other security institutions, Shafaq reported.

Assessment: Read the PMF law as a payroll bill and it becomes legible. Fayyadh’s own description — service, retirement, organisational structure — is pension language, and the pensioners are already in the street. That is why Washington’s leverage over the militia file has always run through the treasury rather than the battlefield, and why an $6.63bn half-year gap between wages and revenue matters more to the outcome than any deadline. One figure to distrust: a Kurdistan24 item circulated on Facebook on 1 August quoted Zaidi saying the Türkiye deal guarantees a minimum of 750,000 bpd. We could not reach the original, and it cannot be reconciled with the 170,000 in Turkish data. Until SOMO publishes a September throughput number, treat the 2027 budget’s oil assumptions as unfunded.