Shafaq News- Baghdad

For many salaried Iraqis and retirees, a month's pay is largely spent the moment it arrives, leaving little room for savings or investment as rent, utilities, food and transportation take a growing share of household income.

Abu Ahmed, a Baghdad resident, said his salary is "gone as soon as I receive it," with rent, bills, food and transportation taking priority before any money can be set aside. What remains, he said, is too little to save in any meaningful way.

The timing of salary payments adds to the strain. Hassan Hadi, another Baghdad resident, said household expenses continue regardless of whether salaries arrive on schedule, with school fees, clothing, private generators, food and transportation consuming much of his income.

What The Essentials Cost

The pressure is reflected in the cost of basic goods and services. Regular gasoline is priced nationally at 450 dinars per liter, about $0.35, under decisions issued by the Council of Ministers.

Many Baghdad households also rely on neighborhood generators during outages in the national grid. The Baghdad Provincial Council sets monthly generator rates; in June 2026, it priced an ampere at 12,000 dinars ($9) for round-the-clock service, 8,000 dinars ($6) for night-only supply and 6,000 dinars ($4.60) in privatized areas linked to the national grid.

Against those costs, Iraq's statutory minimum wage has remained at 350,000 dinars a month, about $269, since a 2017 cabinet decision. That is about 30% below the roughly 500,000 dinars ($385) that labor unions cite as an estimated monthly poverty line.

Education can add substantially to household expenses. Annual fees at Iraq's private colleges range from about 1.2 million to 8 million dinars ($920 to $6,150), rising above 10 million dinars ($7,690) for some medical and dental programs, according to government figures.

A Low Rate Of Saving

Mudhhir Mohammed Salih, financial adviser to the prime minister, told Shafaq News that Iraq's gross national savings average 12% to 15% of GDP, with the rate fluctuating according to oil prices, income, consumption and investment.

Using a measure focused on individuals rather than national savings, economist Hilal al-Taan said about 9.7% of Iraqis saved money in 2024, well below the global average. He attributed the low rate to limited incomes, high spending on food and housing, weak confidence in banks and rising living costs.

Inflation And The Shrinking Dinar

Najm Abdul-Tarish, an academic at the University of Dhi Qar, said much of a household's income goes toward housing, education and healthcare, while inflation erodes the dinar's purchasing power. In practical terms, the money in a worker's pocket buys less even when its face value remains unchanged.

"Higher inflation can therefore erode savings while raising household expenses, putting additional pressure on both saving and investment," Abdul-Tarish told Shafaq News.

Exchange-rate pressures add another dimension. While the Central Bank of Iraq sets the official rate at 1,300 dinars to the dollar, the currency has traded weaker on the parallel market. In May 2026, $100 sold for about 153,750 dinars in Baghdad, equivalent to roughly 1,538 dinars to the dollar, according to exchange-shop data.

Cash Outside The Banks

Salih said a large amount of cash circulates outside Iraq's banking system, although he cautioned that money held outside banks should not be treated entirely as savings because much of it is used for everyday purchases, trade and other transactions.

Moving a larger share through banks could strengthen their capacity to finance economic activity, he said.

"A larger share of savings moving through banks would strengthen their ability to mobilize domestic resources for lending and investment," Salih said, pointing to the need for better banking services, greater public confidence in financial institutions and wider use of electronic payments.

Central Bank figures illustrate the challenge. Total deposits at operating banks fell from 133.50 trillion dinars ($102.7 billion) in 2023 to 122.88 trillion dinars ($94.5 billion) in 2024. Over the same period, bank credit increased from 95.66 trillion dinars ($73.6 billion) to 102.24 trillion dinars ($78.6 billion), increasing the importance of attracting deposits to support lending.

Economist Dhergham Mohammed Ali linked weak savings to the limited use of banks, calling for wider adoption of electronic payments and more point-of-sale terminals and cash facilities across retail businesses and transportation.

By the CBI's latest reading, currency in circulation totaled 111.189 trillion dinars ($85.5 billion), of which 101.966 trillion dinars ($78.4 billion) circulated outside the banking system — about 91.7% of the total.

That does not mean the money represents untapped household savings; much of it finances everyday transactions. But the scale highlights the challenge facing Iraq's banking sector: drawing more economic activity into formal financial channels while many households have increasingly little income left to save.