The Minister of Finance to “Economy News”: Our understanding with Iran is to pay the debts within 3 years
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Finance Minister Ali Abdul-Amir Allawi announced that the Iraqi financial situation has improved relatively this year after the rise in oil prices, stressing that there is an understanding with Iran to pay off Iranian debts within 3 years.
Since the start of the Corona pandemic, Iraq has witnessed a stifling financial crisis, which led the government to resort to borrowing from the Central Bank of Iraq, to pay the salaries of employees and retirees, in addition to increasing popular pressure to create jobs and improve services such as education, electricity and health.
Allawi said, in an interview with Al-Iqtisad News, "Now we do not need to borrow, because our financial situation has improved relatively, but we have negotiations with the International Monetary Fund to help reform the economy."
Mustafa Al-Kazemi’s government began its negotiations with the International Monetary Fund since its formation, in order to borrow to support the financial budget, with the World Bank supporting strategic projects in Iraq, but it stumbled due to the changes made by the Parliamentary Finance Committee on some items in the 2021 budget.
Allawi noted that the Kurdistan region did not contribute to the federal budget, because the agreement with him includes the delivery of 250,000 barrels per day with part of the collection wages, and the Ministry of Finance owns statistics on the region's oil exports, explaining that the Council of Ministers decided to grant 200 billion dinars to Kurdistan because it suffers Economic problems caused humanitarian problems for the people, but this decision will not be automatically renewed every month, but it must be considered again by the Council of Ministers.
Erbil and Baghdad have witnessed financial disputes since 2012, as a result of Erbil exporting oil independently from the center through Turkey, in addition to non-delivery of non-oil revenues, for which the Financial Management Law stipulates that Baghdad receives half of it, which led the Ministry of Oil to file a lawsuit with the The International Chamber of Commerce Court on the State of Turkey, and compensated Baghdad in the amount of 26 billion dollars.
The Minister of Finance stated, "The ministry has nothing to do with this file, but rather it is specific to the Ministry of Oil, but I hear that Iraq's position is strong and it may issue a decision in its favor during the coming period, or a settlement process with Turkey is underway."
economic reforms
The reform curriculum set by the government, which is called the White Paper, needs cadres to implement it, as Iraq contains more than 3 million employees working in the public sector.
He said, "The competencies in the public sector are buried, and we in the white paper want to give them a role and highlight them, and link them with global competencies, and we will also bring in consultants from abroad, as we found a good executive director to implement the reforms, and we have ministries that are currently working well to implement the reforms in the white paper such as Ministry of Oil, there will be resistance to reforms by some departments and institutions that have adopted the wrong work for many years.”
The Ministry of Finance has been working with the World Bank to restructure government banks since 2012, but this project largely failed due to great challenges, but it was reactivated during the current government through the white paper.
The minister confirmed, "We have started restructuring government banks, and the problem we have is 80% in Rafidain Bank. We are working to change the internal system, cut the link between the Ministry of Finance and the bank, and change its board of directors, and this is being done in coordination with the Central Bank, with the introduction of governance," noting that we are in the process of choosing a manager. New Rafidain Bank and a new board of directors.
The Ministry of Finance is also currently working on the preparation of a tripartite budget for the years 2022-2024, and the inclusion of the reforms mentioned in the white paper.
Allawi pointed out that "the 2022 budget will be reformist, unfamiliar, and it is an ideal budget to change the economy, and the numbers in it may be politically unacceptable, but the support policy is still ongoing and we have not changed it, and we have major priorities represented in providing salaries for employees, retirees and social care in addition to Pay the debts, and the budget will adopt the price of a barrel of oil at $50, and we started writing it in order to send it to the Cabinet and then Parliament.”
Iraq is considered one of the tax disabled nations, due to the failure to update the tax law by the state, in addition to the inclusion of taxes that are currently applied within the budget law.
And the minister indicated, "The legislation of a new tax law takes a long time, and we currently have a problem in collecting taxes, so we include taxes within the budget law."
He continued, "It requires reforming the tax system, and this takes 5 years, through the establishment of a tax system that adopts automation and contains qualified employees, because what is happening in taxes now is the result of accumulated wrong policies."
electricity
The Ministry of Electricity repeatedly holds the Ministry of Finance responsible for the failure to provide citizens with electricity around the clock, due to the failure to release financial allocations to establish and develop projects.
Allawi said, "The Ministry of Electricity has a big problem with all its sides. We have problems with gas supply contracts and the efficiency of the productivity of transmission, distribution and collection units. 200,000 people work in the ministry, and this affects production, while the Ministry of Electricity in the Emirates, which is more productive than Iraq, employs 580 people, Also, the Ministry of Finance does not give the money until after it is allocated by the Ministry of Planning."
Iraq imports from Iran electricity and gas to operate gas stations, and with the imposition of US economic sanctions on Iran, Iraq has not been able to pay its $4 billion debt.
Allawi said, "We have an understanding with Iran currently, to pay the arrears during the next 3 years, and I do not think that our dependence on Iranian gas will decrease during the next two years, because the alternatives are still few, as linking Iraq's electricity with the Gulf countries so far is incomplete, and we have not given it Contracting to any company.
external agreements
On the agreement between Iraq, Egypt and Jordan, the minister said that these three markets are close, and could become an important economic zone and Lebanon and Syria may join in the future, because it is difficult to link the Iraqi economy with the Gulf, Turkey and Iran because of the inequality, the Iraqi market is still a market small.
He stressed that the agreement with Lebanon is to supply one million tons of black oil, and Lebanon will exchange it for diesel with companies and under the supervision of international companies, in exchange for Iraq to get professional people from Lebanon working in various sectors such as banking, insurance, education, transportation and tourism, and Iraq will pay their wages as dollars. ll at market price.
The international community, during Prime Minister Mustafa Al-Kazemi's visit to London, formed the Economic Contact Group for Iraq at the end of the year 2020, to support it economically, and it includes the seven major industrial countries in addition to the International Monetary Fund and the World Bank.
Allawi said, "The group meets every 3 months and gives us advice, and we want them to provide technical support, experts and consultants, and they absolutely support, and we will establish a council consisting of 10-12 people, at an international economic level that gives us predictions and developments in the Iraqi and international economy, because It is not acceptable to invest in a particular sector and we may bring in old technologies and this affects us."
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