Public payroll expansion in Iraq: causes and consequences

The public payroll in Iraq has grown unchecked since 2003, commensurate with the country’s vastly expanding oil wealth. With few alternative sources of government income, the state budget’s growth poses worrying questions about whether this ongoing trend can be sustained without risking economic ruin. Based on an analysis of publicly available reports and unpublished government documents, and informed by interviews with officials in Baghdad, this paper quantifies the extent of the expansion in spending on public sector salaries and sheds light on aspects of the state’s budgetary allocations that lack a significant degree of transparency. Notably, the paper focuses on spending trends within key ministries and the state-owned enterprises and offers recommendations on how spending could be curtailed through greater accountability and long-term investment in reform measures that could lead to a more robust approach to managing the country’s economy.