Abdullah Salam - Baghdad
In less than a year, Iraq faced successive crises that struck the economy directly and affected its financial capabilities. The protests that started last October disrupted many activities and facilities, and the Corona pandemic came to disrupt more of them, which clearly affected the global oil sector and collapsed crude prices - which It constitutes 92% of the Iraqi state’s revenues - in the past two months - largely.
The most prominent effect of this economic deterioration is reflected on the salaries of state employees, which has aroused popular concern that government solutions may affect people's pensions.
The monthly revenue from selling Iraqi oil tumbled from about $ 6.5 billion last year to nearly $ 1.5 billion in April.
According to the general budget of Iraq for the year 2019, which amounted to 112 billion dollars, oil exports accounted for 89%, based on 56 dollars per barrel of oil, and at an average export rate of 3.9 million barrels per day.
And oil revenues for the past year exceeded 78 billion dollars, while revenue for the five months that passed this year amounted to nearly 18 billion dollars.
While the deficit in the 2019 budget amounted to about 23 billion dollars, Jamal Cougar, a member of the Finance Committee in Parliament, sees any deficit in the 2020 budget, which has not yet been approved, "to be unstable, due to the instability of oil prices" and this is supported by economists, That the country's budget be monthly, to control price fluctuation.
Confronting the crisis and to
overcome the crisis, there are several scenarios that the government of Prime Minister Mustafa Al-Kazemi may resort to, including reducing salaries, but last Tuesday Al-Kazemi ruled out touching the salaries of people with limited income and retirees, explaining that he would seek to reduce the salaries of the three presidential employees and the special and higher grades, and those with dual salaries and phantom only Besides inciting the rationalization of tunnels.
The government may resort to secure the state’s operating budget and salaries for borrowing, whether from home or abroad.
Commenting that the government might resort to borrowing, a member of the Economy and Investment Committee in the Iraqi parliament, Nada Shaker Jawdat, told Al Jazeera Net that the government had to create conditions before the crisis occurred by not relying on a single major source of income through better activation of border crossing incomes, or developing The economic sector, which I considered a large and renewable source of income, in case it was well invested.
Nada also called for a review of the Rafha law, "a law that guarantees salaries for opponents of Saddam Hussein who left Iraq, classified by professionals as illegal and exaggerated."
Resorting to borrowing
The Parliamentary Finance Committee discussed, last Thursday, the issue of internal and external borrowing, to fill the budget deficit, and the committee asked the government to send a bill in this regard, to be discussed in the House of Representatives and vote on it.
On his part, Cougar told Al-Jazeera Net that Parliament had cut off borrowing in front of the government, but at the present time it is inevitable, in anticipation of a deficit in the payment of salaries for the coming months.
He stressed that the future of salaries over the current year will be guaranteed, because the government is obligated to secure it to ensure its stability, especially since the World Bank ranked the Iraqi banking reserve at a good level, which allows internal borrowing.
Reports indicated that the salaries of employees, retirees and social security amounted to 52 billion dollars, which is more than 43% of the total expenditures of the state in 2019, and monthly salary allocations are estimated at about five billion dollars.
Concerns
and political expectations revolve - about trying to exploit America's Iraqi financial crisis - by offering loans to Iraq during the strategic talks between the two countries, expected to take place later this month.
In this regard, Cougar indicated that there is no general trend regarding determining the borrowing side, but negotiations are determined, but there is no doubt that major countries like America will have their own arrangement and special conditions, noting that borrowing from neighboring countries is easier.
Provisional solutions
In the opinion of the economist, Antoine, that part of the problem facing Iraq is the loss of competencies in managing the economic file, and the dominance of the political decision, indicating that the loans will carry Iraq greater than its energy, due to its benefits, in addition to that it is a type of consumer loans and not investment expected to generate Profits.
Antoine explained to Al Jazeera Net that the state apparatus should be restructured, the higher salaries be reduced, and the allocations that make up of the total salaries should be reviewed at 65%, specifically the higher grades.
He said that the high oil prices in the global market would help in resolving the crisis, but it is not an ideal solution, calling for activating the productive and private sectors, and transforming the economy from rents to production, so that the state will enjoy economic stability in the long term.