June 7, 2005 – With unemployment at staggering if disputed rates, food prices increasing and over a third of Iraqis living in poverty, Iraqâ€™s transitional government is considering a plan to slash government spending by eliminating some public sector jobs and cutting popular subsidies for electricity and oil products.
Government spokesperson Laith Kubba told reporters that the budget cuts, which he said are mandated under a debt-reduction plan sponsored by the International Monetary Fund (IMF), would allow the private sector to expand in areas where government services are reduced.
Kubba said Iraqâ€™s government is burdened with a bloated bureaucracy created during the Saddam Hussein era. He told reporters that the current, transitional government is considering the creation of a new national ministry to eliminate subsidies and bureaucratic waste.
"We cannot tolerate this level of overburdening the government," Kubba said. "We'd like to make sure that those who are in need are protected." But Kubba added, "Currently, it's a free-for-all" when it comes to deciding where exactly to reduce government spending. Without saying how many jobs will be eliminated, he warned that budget cuts "will be a bit painful."
Humam Shamaa, an economist with the Iraqi Institute for Future Studies, told the LA Times that salaries for government workers account for only 20 percent of Iraqâ€™s public expenses. He said cutting public sector jobs is a bad idea, especially at a time when Iraqâ€™s economy is in perilous condition. Shamaa believes that adding to the ranks of Iraqâ€™s unemployed would only fuel the insurgency.
The IMFâ€™s controversial strategy for aiding at-risk economies involves manipulating weak nations into privatization and "structural adjustment" plans favorable to foreign investors â€“ in this case largely as a requirement of forgiving former dictator Saddam Husseinâ€™s considerable international debt. Social movements the world over broadly oppose such policies since they typically result in increased indebtedness and decreased living standards for the poor.