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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Fluctuation and decline in oil prices and their impact on the budget

    Rocky
    Rocky
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    • Post n°1

    Fluctuation and decline in oil prices and their impact on the budget Empty Fluctuation and decline in oil prices and their impact on the budget

    Post by Rocky Thu 16 Mar 2023, 4:45 am

    Fluctuation and decline in oil prices and their impact on the budget

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    We have already adopted the price of oil for budget purposes. It was raised on more than one occasion, and since 2010 it is for the government to adopt a price of 40-45 dollars for budget purposes for a period of five years, to be reviewed after the end of that period. However, successive governments continued to adopt the tendency of rentier economy and use the operating budget to escape forward instead of focusing on solving the problems of the private sector and facilitating its procedures and developing it to reduce pressure on the public sector and move towards expanding the market economy, in addition to applying governance in obtaining non-oil revenues.
    With regard to the 2023 budget, we expected that the price of oil for budget purposes would not exceed 60 dollars or even 65 dollars, which is a price previously adopted in some previous budgets, according to Iraq's financial conditions. But the adoption of $70 was a surprise, especially with the new official exchange rate of 1320.
    In general, it seems that there are several reasons that prompted the current government to adopt the price of 70 dollars per Maronite this year, including an unprecedented huge operational budget, as follows:
    1. The government will use the accumulated financial abundance from 2022.
    2. During the first and second months of this year, large quantities of basic foodstuffs were purchased from the funds of the Food Security Act. This may reduce costs.
    3. The average price of Iraqi oil exceeded 74 dollars a barrel during the first quarter of this year, and this helps to absorb a shock in the decline in oil prices later.
    4. The expected world oil price for the year 2023 ranges between 65-80 dollars per barrel, and some expectations may reach the price of 90 dollars, and this is exaggerated, but the expected annual rate is 70 dollars per barrel. Of course, these expectations take into account the existence of a global economic recession and the possibility of its expansion.
    5. The continuation of the Russian-Ukrainian war is a major factor in the fluctuation and instability of oil prices, up and down.
    6. Russia and Saudi Arabia will work hard to keep the oil price at least $70 per barrel as an annual average for oil prices in general, and this price is commensurate with their annual budgets and financial situation.
    7. Western governments are working seriously to avoid a financial collapse, as happened in 2008, because this time it will be more dangerous because the peoples of these countries have suffered from high prices and energy shortages, and have drained them financially.
    8. The government acted smartly when it presented a budget of this size, ramifications, and details, especially the public expenditure side, which members of Parliament had an important role in increasing through the appointments that were proposed, and tens of thousands of citizens, especially teachers, graduates, higher degrees, daily wages, and others, were confirmed.
    9. The government has thrown the ball in the parliament's court. The members of the Parliamentary Finance Committee will conduct an extensive study of the budget. I think there will be no fundamental changes, whether in the budget items or the price of oil, as it focused on financing salaries, public service projects, health and others that concern citizens, in addition to covering sensitive matters such as projects of the Ministry of Oil and Electricity.
     It has touches that achieve social justice for the distribution of income and contribute to relative social stability. And if Parliament decides to reduce the price of oil, perhaps to the price of 65 dollars a barrel, then this may require the deletion of some items of operating expenses that may be very sensitive in the tightly built budget, and that any change scores a point for the government, not Parliament. 
    10. The political blocs that nominated the government have certainly seen, at the very least, some important and basic items and figures in the proposed annual budget, and there is no doubt that they will discuss the budget with their representatives in Parliament and direct them to approve the budget and pass it quickly and avoid obstruction or delay and without making fundamental changes.
    Finally, I believe that adopting a price of 65 dollars per barrel is considered an acceptable settlement between Parliament and the government if Parliament decides to change the price of oil and some budget items or reduce the deficit for this year.
    He suggested that the government adopt a downward price for the price of oil for budgetary purposes in the coming years.
     

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    Added 03/16/2023 - 12:41 PM
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