Adviser to the Prime Minister: Do not be overly optimistic about the rise in oil prices
Adviser to the Prime Minister: Do not be overly optimistic about the rise in oil prices
04-10-2021 09:26 AM
On Monday, the economic and financial advisor to the Prime Minister, Mazhar Muhammad Salih, warned of what he called “optimism” of the rise in oil prices, while noting that the reform of the economy starts with the non-oil financial sectors.
Saleh said in a statement to Al-Sabah newspaper: “The public finances depend on oil revenues by about 93%,” noting that “there is an energy crisis in the world, with both positive and negative dimensions. The positive is the possibility that the price of a barrel of oil will reach $100, and this matter is not strange. Because Iraq previously sold a barrel of oil for $143.
And he indicated, “The negative thing lies in the escalation of energy prices, which generates inflation in the world, as the prices of food and other commodities are likely to rise dramatically, which may lead to a global recession, so the stability of the economic situation is very important.”
Salih stressed, “Oil returns are good, and in the event that the expenditures of the general budget are adhered to and controlled with the improvement of crude prices, the financial situation of Iraq will be sustainable.”
He pointed out that “there is a problem in how to control public expenditures, so adopting the spending ceiling in the 2022 budget to be similar to the current year, will move the country to a financially comfortable position and will almost eliminate the deficit, and some abundance will be achieved to be transferred to investment projects.”
Saleh warned against “excessive optimism about the rise in oil prices, so this matter must be invested in an optimal manner, especially since Iraq has fixed consumption expenditures, which are the salaries of employees and retirees.”
He pointed out that “reducing spending has become at the expense of the investment budget, and thus the number of the unemployed has increased and employment opportunities have decreased, and this is a big problem that we are facing,” explaining that “non-oil revenues are a problem in themselves because of what he described as (institutional chaos), as the administrations do not have the ability to To collect and not to manage funds for the benefit of the state treasury, and solving this issue is very difficult and takes a long time as well.”
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