Economic reform in Iraq and the lack of a clear vision
Tuesday, January 5, 2016 (00: 0 - GMT)
When he presented the Iraqi prime minister Haider al-Abadi months before the reform package its primary objective the fight against corruption and an end to the theft of systematic public money, grab the grass roots of those reforms with great enthusiasm with some observations which demanded coordination with the legislature and not to stop the implementation of reforms due to the parties under pressure and the political blocs that damaged interests reforms.
Since that time, and every now and then the government or some of its organs launches initiatives calls for reducing dependence on oil resources and diversification of the economy and borrowing from home and abroad, and reducing the salaries and allowances and to encourage private sector participation in economic activity, especially in the sectors of agriculture, manufacturing and promotion of the private national and foreign investment and encouraging small and medium enterprises. Finally, the government launched an initiative to reform the tax system, especially the expansion of the tax base in order to achieve the general budget, which suffers from a severe financial hardship because of falling oil prices additional resources.
Ambition may be seeing clearer than that among those economic affairs, especially the distinction between actions to achieve targets real-time, as the fulfillment of additional resources for the general budget for last year and this year, and the medium and long-term measures which aim to achieve fundamental reforms in the economy and not to confuse them. Upon the adoption of medium and long-term nature of the procedures being done as a package and not as measures sporadic. It is well known that what you are suffering from the worst economic policy in any country, not to deal with its components as a package and determine the effects of reciprocity package of policies that are being picked up so it does not end on a set of actions contradictory goals that seeks to achieve fail.
After long neglecting the subject of reducing dependence on oil and diversify the economy, especially agriculture and manufacturing industry and to encourage national and foreign private investment and reform the tax system, the government can not be based reforms of this kind and hopes to reap the fruit in the short term to supplement the general budget resources and to compensate for the acute shortage of revenue Oil. Governments successive during the twelve years past did not seek to achievements in the field of diversification of the economy and the development of agriculture and manufacturing and to encourage private sector investment in productive economic activity and attract foreign investment, and also neglected what was present from industry and agriculture deteriorated many industries list, especially mixed companies that worked and it produced and distributed profits to its shareholders in the harshest conditions of the siege.
Previous governments also neglected the existing government industries such as oil refineries and power plants, and adopted instead on the import of petroleum products from Iran and the creation of private sector benefiting from the sale of electricity to individuals through generators. And poured the bulk of their attention, if not all, on the development of the extraction of oil and increase production and export sector for being quick and easy and guaranteed resources. It did not seek to inflatable life in the private industrial sector, which is mostly closed because of the blockade, and tried rehabilitation and to encourage Iraqi Industrialists living abroad to return and the exercise of their activities and secure the loans that qualify them to increase their investment and modernize and expand their factories.
In light of the recovery of this sector, the government had the right to talk about the development of the tax system and broaden the tax base. In the current circumstances, where special activities are limited to some service sectors operating in difficult security conditions and difficult for them to plan even medium term to expand its activities due to rapid fluctuations in the security and military circumstances, the government can not talk about broadening the tax base. It was narrated that any pot talking, industrial and agricultural activities and special activities are absent and barely provide continuity of service expenses?
The interview is currently a need to budget revenues other than oil can only be achieved through short-term measures such as reducing all types of current and investment expenditures is not necessary. Which declares him the government between now and then, and internal and external borrowing. The diversification of budget resources through diversification of the economy and encourage private national and foreign investment and the development of agriculture and industry, they are actions that can not be real-time in any way, but it is a medium-measures to the long-term need to climate-friendly have to provide before they materialize. The most important elements of this climate is the establishment of security. There is no development, no investment without security. The latter must be a priority for the government and all political parties and blocs represented by the parliament.
In the field of the development of agriculture and manufacturing Instead of starting new projects from scratch, the government should open the doors of dialogue with industrialists and businessmen Iraqi expatriates who own the plants closed since 1991, to facilitate their return and provide credit facilities to them, as well as the rehabilitation of government projects and mixed companies and reconsideration of the policy Import open the door wide to give the kind of protection for national industry and agriculture.
Any attempt from the private sector to encourage new investments through loans provided by banks with the support of the Central Bank does not represent only a waste of public money. In the circumstances, it is unlikely that these loans lead to the establishment of concrete projects but fail and end no debts. The reform of the tax system and broaden the tax base within it requires, in order to give returns, productivity and service projects worth an effective check income taxed in the form of secure financial resources of the state on the one hand, and bring more justice to the distribution of income on the other.
Writer specializing economic affairs
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