Prime Minister’s Advisor: Tax trusts contribute to securing government spending
Prime Minister’s Advisor: Tax trusts contribute to securing government spending
2025-05-02
The Prime Minister’s Financial Advisor, Mazhar Mohammed Salih, confirmed on Friday that tax trusts are part of the general budget’s financial space and can be relied upon to adjust government spending, ensuring that basic obligations are met without compromising financial stability in the medium and long term. Salih stated in a press statement that “the world is going through a phase of anticipation for the possibility of entering a state of economic contraction, which may develop into a major depression within the next six months, which will be reflected in oil prices.” He added that “Iraq, as a key part of the global energy system, will be affected by any decline in global growth, as a 1% decline in global GDP leads to a decline in demand for oil by about half a percent, causing a glut in the market.”
He also explained that “this situation requires a cautious policy from OPEC+ to ensure the stability of the budgets of oil-producing countries, including Iraq, especially as 2025 and 2026 approach,” noting that “the amended Three-Year Budget Law No. 13 of 2023 adopted a financial hedge with an oil price of $70 per barrel and an export rate of 3.4 million barrels per day.”
Saleh explained that “the 2024 budget was implemented within the comfortable minimum spending limit of 156 trillion dinars, which fully covered the operating budget, including salaries, social welfare, and financing of stalled government projects.” He noted that “the fiscal deficit was financed at 7.6% of GDP, mostly through domestic borrowing, compared to 1.3% in 2023.”
He continued, “If oil prices fall to $60, there are two options: either reduce spending to 130 trillion dinars to maintain the deficit, or maintain the current level of spending and accept a deficit of up to 9% of GDP,” stressing that “all of this is contingent on OPEC+ movements and global geopolitical developments.”
Saleh concluded by saying, “Tax deposits are a semi-permanent resource that can be used within the so-called fiscal space, which allows for securing essential spending such as salaries, support, and social care without threatening the country’s financial stability.”
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