[size=30]A bet on surplus funds from the escalation of oil prices to address 3 files... and an economic opinion in exchange for “refusing” hopes
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Yes Iraq: Baghdad
The bet is escalating on the financial surplus supposed to be achieved by the rise in oil prices of more than 25 dollars above the price set in Iraq’s budget 2021, on the basis of which the state’s expenses are drawn, amounting to 45 dollars per barrel, at a time when the oil price currently exceeds 72 dollars per barrel.
Iraq is counting on rising oil prices and achieving a financial surplus, to complete and address 3 important files, represented by lagging projects, filling the deficit, not borrowing and perhaps paying debts.
However, other economic opinions smash these high hopes, emphasizing the possibility that the achieved financial surplus will reduce the deficit only, without achieving any progress in other files, while the reason for this is that the real deficit is higher than the planned and written in the budget, by doing The decline in non-oil revenues and the achievement of figures much lower than those planned and calculated in the budget.
The government advisor for financial and economic affairs, Dr. Mazhar Muhammad Salih, shows that “final cash revenues will flow into the budget, and its balances will cover the estimated deficit gap of about 29 trillion dinars (20 billion dollars) in the federal general budget for the year 2021, out of a budget whose expenditure ceiling is approximately 130 trillion dinars ( $89.65 billion).
Saleh explained that "the additional cash income will cover the planned deficit and reach the normal limits of 3% of GDP, instead of resorting to internal or external borrowing," as well as it will also lead to the early implementation of "priority investment projects in proportion to the availability of Funds and the transition from the allocation stage to the financing stage, instead of the delay and reluctance that occurred in previous years due to lack of funds.”
Saleh noted that the efficiency of expenditures will lead to the payment of many arrears related to the private sector, such as entitlements to farmers, contractors, retirees and others.
The delayed projects amount to more than 6,000 projects worth 126 trillion dinars (about $89 billion), at a time when 80% of these projects have reached the completion stage, but the release of funds is an obstacle to their completion, according to the Ministry of Planning.
Filling 70% of the deficit only
For his part, the head of the Iraq Future Foundation for Economic Studies, Manar Al-Obaidi, expected that the increase in oil prices would contribute to reducing the budget deficit by 70%.
Al-Obeidi said that "the problem that Iraq is currently facing is its inability to maximize its non-oil revenues, and this contributes to increasing the financial deficit, in addition to the failure to start implementing the financial agreement with the Kurdistan Region of Iraq, which provides for the payment of 250 thousand barrels per day to the Iraqi government."
He pointed out that "it is very difficult to invest the surplus of oil money, as the volume of internal and external debt is also high."