Iraq’s revenues are less than its expenditures, and the investment share is zero

Iraq’s revenues are less than its expenditures, and the investment share is zero

5-18-2023

Iraqs revenues are less than its expenditures and the investment share is zeroObservers are wondering about the source of financing the development projects that the Iraqi Prime Minister, Muhammad Shia’a al-Sudani, promised to implement, especially after what was mentioned in the budget bill, which revealed a budget deficit of about $10 billion.

Baghdad – Despite the great promises made by the government of Muhammad Shia al-Sudani to implement major investment projects aimed at liberating Iraq from dependence on oil as the only source of revenue, the proposed budget figures, which are being examined by the Finance Committee of the House of Representatives, reveal that there are no funds to implement these projects. And that the bet in talking about it depends either on the contributions of local capital, which are owned by the government coalition parties and their militias, or on projects implemented by foreign companies.

Economists conducted a census of those numbers, and concluded that the inevitable government expenditures, on top of which are salary expenditures, are higher than Iraq’s oil revenues, which makes the share of investment in the budget zero or less.

And Al-Sudani stressed during a meeting of his government in the middle of last month, which was devoted to discussing the provisions of the draft federal budget law presented to the House of Representatives, on “the government’s determination to liberate the Iraqi economy from sole dependence on oil and fluctuations in its prices in global markets, by revitalizing the rest of the promising agricultural, industrial and service sectors.” “.

There are about a million fictitious employees whose salaries go to the parties and militias that registered them on the “fixed angel”

Ikhlas Al-Dulaimi, the second vice-chairman of the Finance Committee, stated that “the budget discussions have reached advanced stages, after the committee hosted most of the ministries and institutions, of which only a few are left.” And she added, “The committee reached a vision that it is very difficult to reduce the volume of spending in it, as we found real spending that the state needs because of the obligations or sums of money it incurred due to exceptional circumstances, from demonstrations and other major problems, in addition to the fact that launching appointments added large financial burdens.” on her”.

The economist and professor of economics at the University of Basra, Nabil Al-Marsoumi, conducted a census of fixed expenditures in the 2023 budget in a tweet, to discover that it amounts to 130 trillion dinars, or the equivalent of about 90 billion dollars, while the total expected oil revenues for Iraq for this year reach 117 trillion dinars, or the equivalent of about 80 billion dollars. Billion dollar. These expenses include the salaries of employees on “fixed staff” amounting to 59.814 trillion dinars, or the equivalent of about 40 billion dollars, while social welfare expenses, debt service installments, oil licensing contract expenses and others consume up to another 50 billion dollars, so that Iraq finds itself facing a reality Spending amounting to minus 10 billion dollars at least, which is the same as the budget’s inability to cover its basic expenses, which Al-Dulaimi said, “It is difficult to reduce the amount of spending in it.”

The total number of employees in Iraq is more than 4 million employees, registered on the “fixed staff”, consuming half of the oil revenues, with an average salary of $900 per month.

And this huge number of employees is based on two black holes to absorb resources. The first is that there are up to about a million fictitious employees whose salaries go to the parties and militias that registered them on the “fixed angel.” The second is that the productivity of the other 3 million employees is less than 20 minutes a day. If these employees only work two hours a day, then 300 thousand employees can replace the three million.

Observers say that jobs in Iraq are part of a system of social bribery practiced by the state to maintain stability and ensure loyalty, and not to serve productive purposes.

The volume of the budget being discussed by the Finance Committee in the House of Representatives is 198 trillion dinars, or the equivalent of about 136 billion dollars. And in the event that there are no revenues available to cover this budget, the government will be forced to pay the deficit through more borrowing and consuming the available cash reserves in Iraq’s account with the US Federal Reserve.

Iraq’s total oil revenues last year amounted to $115 billion. This means that the current year’s budget exceeds this revenue. This makes the investment budget amount to minus 21 billion dollars in this case.

$115 billion, Iraq’s total oil revenues last year, which means that the current year’s budget exceeds this revenue.

Al-Dailami said that the Finance Committee is trying to “address the deficit imbalance by maximizing state revenues and setting texts that achieve collection, as our non-oil revenues are not at the level of ambition, and we need support and regulation of revenues in order to match oil revenues, or at least be at a reasonable percentage in the budget and not such a small percentage.” very”.

Observers say that approving the budget is delayed, not only because the “hernia” in it is greater than the “patch,” but also because there are two other levels of conflict over shares in the budget. The first is related to the Kurdistan Region and the delayed salaries of employees there. The second relates to provincial shares.

A member of the Finance Committee, Moein Al-Kazemi, says regarding these shares, “There is a tendency to increase the development of the regions from 2 trillion and 500 million to 4 trillion dinars, taking into account that the emergency support budget was disbursed to the provinces at the beginning of this year 2023, and not much of it has been spent so far.”

Al-Kadhimi stated, “The governors have nearly 8 trillion dinars, distributed and not yet used, in addition to the remaining sums from previous years. Therefore, the provinces have a great opportunity to complete projects and not keep the money circulating.”

However, local observers say that the unused funds, which amount to about $5.5 billion, are not sufficient for local development purposes, to address the problems of water shortages and infrastructure. As for the general level, the country has nothing to achieve with the promised investments to liberate the economy from dependence on oil materials.

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