Iraq.. The fiscal surplus will decrease by 75% next year, and 45% of the accumulated surplus will be fully spent in 2023
Iraq.. The fiscal surplus will decrease by 75% next year, and 45% of the accumulated surplus will be fully spent in 2023
2022-12-23
Yes Iraq: Baghdad
It is hoped that Iraq’s fiscal surplus will decrease next year with the decline in oil prices after a huge jump in the current year 2022, and according to special calculations conducted by “Yes Iraq”, the fiscal surplus will decrease next year by 75%, in contrast, government spending in the next year 2023 budget increased by 10 %, which means that 45% of the fiscal surplus achieved in the current year will be fully spent.
Fitch said that high oil prices led to the improvement of many credit measures in Iraq in 2022, but the absence of structural, economic or financial reforms and the persistence of political risks restrict the rating.
The agency’s report indicated that the budget surplus will swell to about 10% of GDP in 2022, driven by higher oil revenues, while political instability and the absence of a budget restricted spending growth to some extent, indicating that oil production grew by 12%, In line with the OPEC+ production agreements, it pushed real GDP by close to 10%, while nominal GDP likely grew by 36%, pushing the economy above levels reached in 2013-2014 (albeit It was not per capita (in terms of strong population growth).
The agency expected that the budget surplus will shrink, as the surplus will be much less in 2023 at 2.2% of GDP. In the event that we assume an increase in spending by at least 10%, to reach 135 trillion Iraqi dinars, and that oil revenues will be moderate, as it amounts to Brent crude price will average $85 per barrel versus $100 per barrel in 2022.
He pointed out that the Ministry of Finance is currently preparing a draft 2023 budget to send to parliament, but it is unlikely that the 2023 budget will include financial reforms as outlined in a white paper in October 2020.
According to the figures mentioned, the fiscal surplus in 2022, which amounted to 10% of the gross domestic product, means that the surplus amounted to more than 20 billion dollars in 2022, while in 2023 it will reach 2.2% of the gross domestic product, meaning that it will be slightly more than 5 billion dollars. Only, which means that Iraq’s fiscal surplus next year will decrease by 75% compared to 2022.
Specialists have previously warned that oil will not remain at these attractive prices, and a financial surplus will only be achieved for 3 years. Therefore, the financial surplus is a golden opportunity to exploit it in creating a sustainable financial resource and invest it in improving the economy, as it is an opportunity that will not be repeated to take advantage of the oil surplus to build a new economy. And investing it to open a new door for financial revenues instead of relying entirely on oil, but so far it appears that the financial surplus will go to more appointments and salaries without real interest or making a sustainable economic source.
This appears from the volume of expected spending next year, as it will increase according to indicators by 10%, that is, from 117 trillion to 130 trillion Iraqi dinars, or about 9 billion dollars, which represents 45% of the fiscal surplus achieved in the current year, which will be spent next year.
yesiraq.com
