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[You must be registered and logged in to see this link.] Low oil prices and the absence of alternatives deepen the economic crisis in Iraq[You must be registered and logged in to see this link.]
Despite being one of the largest producers, Iraq was severely affected by the crisis of low oil prices globally, in light of the dependence of the state budget on oil sales by more than 90 percent, while the budget basically suffers a large deficit.
The former Iraqi Oil Minister, Jabbar Laibi, said that Iraq’s failure to take measures to overcome the fluctuating oil price in the global market, and the heavy dependence on it, makes it affected strongly, explaining that Iraq’s options are limited in dealing with the crisis of low oil prices.
The absence of the alternative
He said it is "not the first time that world oil prices have been subjected to tremors, volatility and a drop in prices", while he missed, as usual, a mechanism to alleviate the crisis.
Laibi pointed out that “some oil countries are not affected by the low prices and can deal with this file by relying on selling some products and on selling gas and on the petrochemical industry,” noting that “there are limited options in dealing with low oil prices due to the absence of manufacturing industries And the gas industry for several decades. ” According to (Iraqi News Agency).
Financial shock
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, warned that the drop in oil prices to less than $ 30 for a non-short-term period means, of course, dealing with a major financial-economic shock based on the absence of important sovereign resources and depriving the public budget of it, taking into account that the country's budgets depend 92% on oil revenue.
He added that "Iraq loses from 40 to 50 billion dollars annually due to importing oil derivatives or burning gas and neglecting the oil industry, and the government should seriously consider restructuring the Ministry of Oil," calling for "the transfer of the petrochemical industry to the Oil Ministry, as well as the presence of fenders that protect The country of any drop in oil prices. "
And oil prices have fallen to more than 30% this week, after OPEC failed to reach an agreement with its allies regarding production cuts, and Saudi Arabia's decision to cut oil prices and its intention to increase production.
The general manager of the Oil Marketing Company Alaa Al-Yasiri said that the company is "following with interest the developments of the oil market and that it is conducting extensive contacts with the governors of the Organization of Petroleum Exporting Countries (OPEC)."
Dumping the market
For his part, Assem Jihad, spokesman for the Ministry of Oil, considered that "dumping the world market with oil is not in the interest of producing countries and harms their economies and leads to instability and reflects negatively on the Iraqi economy, in addition to that it undermines development opportunities."
He stressed that the lack of agreement between Saudi Arabia and Russia contributed to the decline in oil prices in global markets, as well as Saudi Arabia's announcement of lower oil prices.
He continued, "Iraq is working to play a role in bringing the views of the producing countries closer in order to reach an agreement that restores the balance of the oil market and its stability," noting that "any price war to acquire the largest market share does not serve the interests of the producing countries."
Fiscal deficit
There are concerns that employee salaries and pensioners will be affected, and that they will eventually be forced to borrow.
The Victory Coalition warned of a fiscal deficit that paralyzes the country's obligations and exposes the country to a societal security collapse.
The coalition said in a statement: “The failure of the financial and economic policies and the wasteful and wasteful spending policy helped enter the financial and economic risk zone. The budget deficit exceeds 50 trillion dinars, and it is increasing, despite the huge financial balance inherited and lost by the current government, and the current and expected decline in prices Oil will put the country in the deficit category to pay salary and operational budget benefits by the end of this year. ”
For his part, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, said, "The drop in oil prices has an impact, but there are strict financial treatments."
Saleh pointed out that "there are financial measures to secure the salaries of employees, which are followed by the government, including the pressure of spending and the postponement of some unimportant projects in addition to other treatments."
Budget structuring
The budget deficit in Iraq is 60 trillion dinars (50 billion dollars), while the size of salaries is 56 trillion dinars and there are fears of being affected by the crisis, while some politicians attributed the cause of the deficit to the expansion of government spending and corruption, and the impact of the continuing dispute over the resolution of the new government, in a delay Financial Budget File for 2020.
The appearance of Mohamed Saleh said that the only solution to pass the budget is to restructure it.
He added, "The House of Representatives has before it the task of reviewing the legislations issued from 2003 to the day that have major unchanging financial consequences."
Saleh explained that "in the event that the budget is not restructured and alternatives and other solutions are found, then it is likely that it will not be approved this year, and the current investments and expenditures remain in progress and dependence will be on the size of revenues only."
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