Monday Morning Iraq Economic News Highlights 7-3-23
A Government Source Denies The Prime Minister’s Appeal Against The Articles Of The General Budget Law
Baghdad – conscious Today, Monday, a government source denied that Prime Minister Mohamed Shiaa al-Sudani had challenged the articles of the General Budget Law. The source told the Iraqi News Agency (INA), that “there is no truth to Prime Minister Muhammad Shia’ al-Sudani’s appeal against the articles of the general budget law.” https://www.ina.iq/188640–.html
The Coordination Framework Announces Its Support For The Government In Implementing The Federal Budget Law
Iraq 2023-07-03 Today, Sunday, the coordination framework affirmed its support for the government in implementing the budget law, while stressing the necessity of dealing centrally in all decisions and international relations with Iraq.
The framework said in a statement, “Today, the coordination framework held its regular meeting in Hammam Hammoudi’s office to discuss a number of issues, foremost of which is the painful attack on a copy of the Holy Book of God by an extremist.”
He added, “The meeting opened with a speech by Prime Minister Muhammad Shia’a al-Sudani on the latest political and service developments in the country,” noting that “the meeting affirmed its rejection and denunciation of the sinful assault on a copy of the Holy Book of God.”
The framework appreciated “the efforts of the government and the Ministry of Electricity and its loyal cadres, which they exerted in improving the reality of electricity throughout the country,” referring to “the government’s support in implementing the federal budget law and accelerating that to serve citizens.”
The framework called on “all cultural and social institutions to spread the correct and authentic Islamic and societal values,” stressing “the independence of Iraq and its freedom to dispose of its money as the Iraqi interest requires.”
The framework stressed “the need to deal centrally in all decisions and international relations with Iraq.”
https://kirkuktv.net/AR/Details/16093
Parliamentarian: The Success Of Economic Plans Depends On Ending US Dictates
Information/Baghdad.. On Monday, the representative of the Sadiqun Parliamentary Bloc, Rafik al-Salihi, pledged the government’s success in economic reforms by getting rid of American dictates, accusing the American side of working to sabotage the Iraqi economy by all means.
Al-Salihi said in an interview with Al-Maalouma agency, “The United States of America besieges the Iraqi economy and makes it surrounded by it and prevents its launch towards the major investment countries.”
He added, “Iraq needs to strengthen economic sovereignty and not follow the United States in commercial transactions and giant investment projects.”
He continued, “The American ruler of Iraq, Paul Bremer, turned Iraq into a rentier, consumerist, and weak country, with no production, no industry, no agriculture, in order to continue following America.”
The head of the Federation of Iraqi Industries, Adel Akab, had called on the government to cancel the decisions of the Civil Coalition Authority of the American occupation that are unfair to the national industry, accusing Paul Bremer of encouraging the killing of the industry. LINK
The Seriousness Of Article 61 In The Tripartite Budget
Economical 2023/07/03 Dr.. Ahmed Hamid Al-Hathal After a difficult labor, the budget was approved by the parliament, and this parliament did not focus much on the economic aspects in the general budget allocations, which reflect the economic role and criterion of success for any government.
The tripartite budget did not change the reality of a different ambition because Article (77) stressed that the Council of Ministers sent the general budget (2024-2025) to the House of Representatives for approval. The financial, social and political aspects were given little attention to the economic aspects, and they also did not rely on financial sustainability analyzes and the principle of costs and returns.
This aspect requires extensive and in-depth studies that are difficult for the decision-maker to understand well.
This is evident from the outputs of the general budget and the executive and legislative authority’s vote on Article (61), which emphasized the perseverance of the deficit by excluding it from the amended Financial Management Law No. (6) of (2019). I do not know what is the benefit of approving laws if they are suspended by subsequent laws?
This is not an exception for a specific case, but rather a methodology that continues in most of the previous years of the general budget.
The seriousness of this article comes from the increase in the financial burdens on society, and this is further illustrated by the term “financial illusion”, which allowed the budget deficit to increase by more than 20 percent.
The deficit ratios of the gross domestic product, when set at 3 percent or 5 percent, are intended to regulate the work of the budget and control the pace of public finances from the deterioration that will harm future generations that will pay dues today,
so the current value of future government debt will be high in view of the indicators of sustainability Financial sustainability and public debt, as it will rise, according to the scenarios of this budget, by more than 70 percent of the gross domestic product, after it had stabilized at about 45 percent, and this is what is called in the economy (the indebtedness trap).
We may witness a state of Ponzi financing, as the items of the general budget will be disrupted in a way that the financial authority cannot control, and then the central bank will intervene more broadly to finance a large part of the government deficit, either through open market operations by purchasing public financial bonds in larger quantities, or by lending public finances in large quantities. Direct, and this is prohibited by the Central Bank of Iraq Law No. 56 of 2004.
Despite the prohibition of direct borrowing, the Central Bank continues to deduct these transfers until an article that consolidates the financial-oil dominance appeared by deducting 23.504 trillion dinars through the Central Bank. This is a dangerous development for monetary stability in light of the continued imbalance of the exchange rate and we are approaching the most dangerous type of inflation Prepares the process of currency collapse and fragile economy.
Most developed and emerging countries put ceilings on government debt so that there is no comfort for politicians to use this debt to finance public finances due to the political and social pressures caused by the mistakes of previous policies and the failure to use real economic methods to achieve economic growth by realizing the added value of the non-rentier sector,
so we see that The budget items for the year 2024-2025 are amended according to the requirements of financial sustainability as long as there is financial abundance for this year in order to ensure the continuity of public debt sustainability and fiscal continuity in financing public expenditures without forcing it into structural corrections that harm some economic sectors, and the entry point for such a procedure is to set a ceiling
The public debt in the budget ranges between 40-50 percent of the GDP in order to ensure that the public finances will search for other alternatives to enhance fiscal discipline through non-oil revenues, and borrowing according to its philosophy remains in its golden rule.Investment-oriented only to enhance non-oil revenues. https://alsabaah.iq/79830-.html
Parliamentary Finance Fears That The Expected Budget Revenues Will Not Be Achieved
Posted On2023-07-03 By Sotaliraq Baghdad / Firas Adnan The Parliamentary Finance Committee expressed its fear of not achieving the planned revenues in the budget, stressing the possibility of high deficit rates, stressing that Iraq achieved non-oil revenues at best of 12.5 trillion dinars.
Committee member, Representative Mustafa Al-Karawi, stated that “the revenues carried by the budget are 134 trillion, 117 trillion of which come through oil.”
Al-Karawi added, “There is a fear we have of not achieving the non-oil revenues that were planned by the budget at 17 trillion, given that Iraq, at its best, did not achieve more than 12.5 trillion dinars.”
He pointed out, “This is what makes us fear that the deficit rate will rise to more than the limit set by the budget, which amounts to 64 trillion dinars.”
Al-Karawi stressed that “the budget was built on an export basis of 3.5 million barrels per day,” noting that “Iraq lost for two months 400 thousand barrels per day that were supposed to be exported from the Kurdistan region after the court’s decision to stop exporting oil from the region.”
He explained, “The price of a barrel of oil is $70, according to the budget, and this makes us face a loss of up to 9 trillion dinars.”
And Al-Karawi indicated that “OPEC has reduced Iraq’s share of oil by 211 thousand barrels, and the price of a barrel is very worrying and may be less than what is fixed in the budget.”
And he added, “The annual export does not reach 365 days a year, given that there are days when it is not possible to export due to weather problems or defects in tankers, and therefore oil revenues are likely not to be achieved according to what is in the budget.”
Al-Karawi went on to say that “the political blocs passed the budget in most of its paragraphs by the majority, despite the presence of objections, especially in terms of high deficit and spending rates.”
For his part, Majed Al-Suri, a specialist in economic affairs, stated that “the apparent deficit borne by the budget is 64 trillion dinars, but there are many, many factors that overlap in stimulating this deficit.”
Al-Suri continued, “The first of these factors is the quantities of oil exported,” stressing that “the quantities exported during the past month amounted to 3.3 million barrels per day.”
He explained that these quantities are less than what is estimated at 200 thousand barrels, and this will in turn lead to a decrease in imports by about 7 trillion dinars.
Al-Suri pointed out that “the price set by the law is 70 dollars, but what is actually sold from Basra ranges between 72 to 75 dollars, and if we say that the average is 73 dollars, this will lead to an increase in revenues and a reduction in the deficit resulting from the decrease in quantities by about 3 trillion.” Dinar”
And he believes that “the problem does not lie in the planned deficit, but it is in the management of budget funds. The law was delayed for more than six months, and today we are waiting for the instructions to be issued, and with this we entered the seventh month, and this leads to a significant reduction in investment expenditures, and then the deficit decreases and with it borrowing decreases.”
Al-Suri stressed that “operating expenses amounting to about 133 trillion dinars can be covered from revenues amounting to 134 trillion dinars.”
And he continues, “Part of the operating expenses will be paid through the surplus from last year, estimated at 23 trillion dinars.”
Al-Suri added, “A one-dollar decrease in oil sales within the export capabilities and the price specified in the budget will reduce revenues by about one trillion and 66 billion dinars.”
And he finds, “The current conditions are capable of reducing the planned deficit set by the budget to a large extent.”
Al-Suri concluded, “There is an exaggeration of the operating expenses of the budget by a large amount compared to the actual expenditures of last year, which amount to 112 trillion dinars and include salaries, subsidies and aid. Since 2005, Iraq has used to implement 80 to 90% of these expenditures, and the remaining percentages, in turn, will also contribute. in reducing the deficit.
The Ministry of Justice had announced the publication of the budget law in the Iraqi Al-Waqa’i newspaper before the Eid holiday, while the Ministry of Finance is preparing to issue instructions for its implementation.
It is noteworthy that the House of Representatives had voted on the budget with amounts that are the highest in the history of Iraq, amounting to 200 trillion dinars, with a deficit of 64 trillion dinars, for three years. LINK
Former Parliament Decision: Passing The Oil Law Is Enough To End All The Problems Of Iraq
Information/Baghdad… Former Parliamentary Rapporteur Muhammad al-Khalidi confirmed, on Sunday, that Iraq’s most complex crises would end immediately after the adoption of the oil and gas law.
Follow the “information” channel on Telegram.. news that does not need to be documented..
Al-Khalidi said in an interview with Al-Maalouma, “The oil and gas law is one of the pending legislations since 4 parliamentary sessions due to political differences, and if it is approved, most of the complex problems will end.”
He added, “Five important points must be available to proceed with approving the law, the most prominent of which is political consensus, defining export and management mechanisms, the quantities produced from each field, and the powers and “as of the provinces.”
Al-Khalidi pointed out that “approving the law according to a consensual formula will be in the interest of everyone without exception and end the dispute between the center and the Kurdistan region.”
He continued, “Iraq’s dependence on what is known as the rentier economy remains a dangerous step in light of the rapid changes in the energy sector, indicating the emergence of solutions regarding the energy file that may push oil prices down at record rates, which constitutes a source of embarrassment for the country’s budget, which relies 90% on revenues from the sale of oil. 25. Done LINK
