Monday, October 25, 2021 3:12 PM
Baghdad/National News Center
Today, Monday, Adviser to the Prime Minister, Mazhar Muhammad Salih, set a condition for achieving financial balance and eliminating the planned deficit in the 2022 draft budget.
Saleh said, in a press statement, that "the average price of a barrel of oil if it reaches $75 over the course of the fiscal year, will achieve balance and the planned deficit in the 2021 budget will disappear by about 29 trillion dinars, in a total spending ceiling specified at about 129 trillion dinars."
And he continued: “We must add another constraint represented in non-oil revenues, which were estimated at about 20 trillion dinars, and they are not expected to achieve more than 40%. This means that there is an actual self-deficit that has been generated, and it needs financing, and it will also be financed from the surpluses in the price of a barrel. oil.”
He added, "If it is assumed that the efficiency of the exchange in the budget is not 100% as some expect, the average price of a barrel of oil is 75 dollars, it must achieve financial surpluses above the balance point of the budget."
He pointed out that “the possibilities of the 2022 budget, if the total spending ceiling is adopted by the same general budget law 2021 of 129 trillion dinars with a possible increase of 5% in total spending, with an adjustment to the price of a barrel of oil, to be $ 60 a barrel instead of $ 50 that was announced.” Previously, this meant that no less than 65% of that deficit would fall even within the low price range of a barrel of oil in the general budget.
And he added, by saying, “Assuming that the planned deficit will rise to be around 36 trillion dinars instead of 29 trillion dinars, and if we take into account the increase in the quantities exported of Iraqi crude oil in the year 2022 specifically after the end of the restrictions of the OPEC Plus agreement, which restricted the quantitative shares of member countries, the budget The equilibrium limit at the specified minimum price range will reach $60 per barrel of oil, even if non-oil revenues deviate from the starting line set for them, as price increases above $60 per barrel will compensate them in all cases.
He explained, "This means that the general budget in 2022 will achieve surpluses within the same fiscal buffer, especially if the average annual oil barrel increases to be at least $75."
He pointed out that “the surpluses will be divided in two directions, the first of which is to build a precautionary financial account called the Budget Stability Account, which is the government’s foreign reserve to meet the fluctuations of public budget revenues in the coming years, and it is called the Budget Stability Fund to achieve financial sustainability.”
He added, “The other side of the financial surpluses will be spent on investment projects, especially faltering income-generating projects that maximize added value, absorb the momentum of unemployment and help raise growth in GDP by no less than 5% or double the annual growth of the country’s population, in a manner that achieves the minimum levels of economic and social welfare. “.
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