Features of the federal budget for Iraq 2020 and actual disability conflicts
Features of the federal budget for Iraq 2020 and actual disability conflicts
2020-03-12
Dr.. The appearance of Muhammad Salih
The 2019 fiscal year for Iraq has passed, with a default deficit of about 27 trillion dinars, and that deficit constituted an estimated 20% of the total total spending of 127 trillion dinars.
It was covered without borrowing or external borrowing, at least, as the rent financing came from two sources, the first of which was a rounded surplus from the 2018 budget with a balance of no less than 17 trillion dinars and the second, from the high average Iraqi oil prices, the source, which was estimated at $ 64 per barrel throughout The year 2019 compared to the price of a barrel of oil installed in the 2019 budget of $ 56 a barrel, with an export capacity of about 3,88 million barrels of oil per day.
Taking into consideration that the increase in the list of wages and salaries that occupied a percentage in the 2018 budget in excess of 57% of the total government spending may rise in the 2020 budget to 67% of the total current government spending due to appointments that added nearly half a million new government employees.
It is noted that during these two positive financial sources, the fiscal year ended in 2019 in a state of near balance and without a real deficit, but it came free from any added financial hedges, which can supply a budget deficit of 2020 except with an opening balance that may reach up to mostly 3 trillion dinars.
Thus, the estimated deficit or (default) deficit in the budget for the year 2020 will rise to approximately 50 trillion dinars, which this time represents about 30% of the total spending in the said budget compared to the same default deficit in the 2019 budget, which was estimated at that time by about 20% of the total government spending.
Thus, the deficit-to-GDP ratio in the 2020 budget will constitute a ratio of 78%, compared to the international standard rate of no more than 3%.
Accordingly, there is an expectation that the (default) deficit of 50 trillion dinars in the budget for the year 2020 will turn into a (real) deficit that requires financing it by borrowing inevitably and with an amount no less than its amount for the 2018 fiscal year surpluses, which amounted to a minimum of 17 trillion dinars as indicated above. in advance.
As global studies and surveying centers such as Fitch global estimate in their last report about their analysis of the risks surrounding the Iraqi economy to two basic things, one of which is the average price of a barrel of Iraqi oil exported to nearly $ 62 throughout the fiscal year 2020 compared to its price, which actually averaged $ 64 in a budget The year 2019 (which will reduce the oil revenues bet on the design of the aforementioned default deficit) and the other thing is that Iraq has to break its pledges to adhere to a specific production ceiling and according to the recent OPEC agreement to increase its daily production to five million barrels of oil I crude daily, with an increase of half a million barrels, which helps to increase its export capacities to compensate for the decrease in the resources of the public budget.
In spite of the high budget expenditures currently according to the foundations that are still relatively optimistic based on the condition of adequacy in oil revenues sufficient condition, the review of the draft budget will remain a necessary condition necessary.
There are concerns surrounding the future of energy markets towards a decline in global oil demand and the availability of near-stagnation indicators in the global economy if the price of a barrel of Iraqi exported oil is currently sold at about $ 49 a barrel, which is less than the price specified in the 2020 budget of $ 56 a barrel as well.
At a time when the IFC’s economic report in early March 2020 showed, global GDP is likely to see growth of approximately 1 percent in 2020. This potential reading is less than last year’s 2.6 percent estimates, and would It is the weakest since the global financial crisis in 2008.
This necessitates extreme caution towards reviewing the budget structure radically and avoids the country resorting to the risks of deficit financing to support the budget support through borrowing, external borrowing, or resorting to more flexible internal borrowing.
As the financial indicators of debt sustainability continue to confirm that the debt-to-GDP ratio is around 5556% .
And what we call for is not an invitation to austerity, but there is an invitation to re-engineer the Iraqi public finance and spare the public budget problems of the equivalent of the so-called fragile budget restrictions –
Soft budget constraints in which spending has become smoothly through the expansion of government advances, overdraft and borrowing in the hope of quick potential government revenue collection, which are all from good government habits, and inevitably help to accumulate debt and expand the public revenue deficit, which loses the issue of fiscal consolidation Its main manifestations are reducing the deficit gap in public revenues or reducing the amount of accumulation in public debt. All of them lose the country’s financial structure, the ingredients for sustainability, to achieve stable macroeconomic and social goals.
Finally, the approval of the federal general budget for Iraq for the year 2020 will depend on the availability of a government that has the ability to pass bills to the House of Representatives according to the constitutional process, as official approved applications do not allow the caretaker government to pass bills and submit them to the House of Representatives to legislate them so as to limit the activities of the Cabinet in a government Conducting business on the practice of routine executive matters in accordance with the laws, regulations and directives in force.
There is no option before the financial authority today, except to adopt the principles stipulated in the Federal Financial Management Law by spending 1/12 monthly of the total actual expenditures in the 2019 budget.
So, in this case, the exchange will cover the government’s operational expenses, in particular salaries, wages, pensions, social welfare allocations, external and internal debt service payments, and only the expenses of ongoing investment projects.
And if the fiscal year ends until December 31, 2020 without adopting a federal general budget, this means that the country will be deprived of any new government investment projects except those that are under construction, which means maximizing the slowdown in economic growth and the availability of investment financing capabilities that are less to counter the growth The labor force added to the labor market in the year 2020, which is estimated at less than 400,000 added job opportunities annually, which may fuel a relative stagnation in economic growth and an unemployment rate that will exceed 18% of the total labor force and at the same time generate discouraging signals to investors in The private sector, due to the fact that Talents is a financial plan for the year includes explicitly or implicitly economic targets and social indicators important.
Thus, the lack of approval of the budget will mean, over time, the absence of the knowledge of investors and the rest of the market makers regarding the nature of the country’s economic and social goals that enable them to take positive decisions to advance business activity more broadly.
burathanews.com