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[size=36]Sudanese advisor: Low oil prices may raise the budget deficit to record levels[/size]
Economy| 11:27 - 03/18/2023
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Baghdad - Mawazine News
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, said today, Saturday, that there are signs of an "oil glut" that may lead to a drop in prices this year to an average between 60-65 dollars a barrel, indicating that the drop in oil prices may raise the deficit in Budgeting to standard rates.
Saleh stated, "Indicators of oil markets in the world show that the cycle of oil assets is heading towards a decline, causing semi-deflationary price effects under two effects. Aggregate demand, especially in the energy-importing and consuming western economies, which affects the growth of demand for crude oil in the energy markets.
Saleh added, in an interview with the official news agency, followed by Mawazine News, that "the second effect comes in that the Russian Federation, as a party to the war with the West, has begun to market its oil to the markets of India, China and Asia at $ 20 less than global oil prices, which is a pattern of an undeclared price war." .
He continued, "The two factors constitute signs of an oil glut that may lead to a decline in oil prices this year to an average between 60-65 dollars a barrel, which may prompt the Organization of Petroleum Exporting Countries or the (OPEC Plus) group to maintain the stability of their countries' budgets by reducing something." of production according to members’ quotas, but the decision of OPEC Plus may contradict the hypothetical ceiling for oil prices adopted by Western economies from the parties to the war in Ukraine and energy consumers, specifically (NATO countries), which implicitly want to load part of the war bill on the shoulders of the oil-exporting countries and devour their surpluses from oil revenues."
Regarding the possibility of a decrease in oil prices and its impact on the budget, Saleh said, “The draft federal budget law for the year 2023, which was approved by the Council of Ministers in the past few days and was submitted for legislation to Parliament, which approved the price of a barrel of oil of $70 in order to evaluate oil revenues in the aforementioned budget. The possibility of oil prices falling below $70 per barrel of Iraqi oil, which will inevitably expand the planned deficit bill in the federal general budget, which is currently estimated at about 63 trillion dinars, and may raise the deficit to other record rates, adding between 8-16 trillion. Dinars to the aforementioned deficit balance in the event that expenditures remain on their current estimated status, especially when the average price of a barrel of exported oil reaches between 60-65 dollars per barrel.
And he continued, "The entire draft budget has become before the table of the House of Representatives, whose duties are to consider expenditures in light of the expected revenues before legislation," noting that "if the general budget law is legislated as approved by the Council of Ministers, the executive authority will face the possible possibilities of a cycle The oil assets themselves, but in a way that preserves the goals of the government program to protect and stabilize the standard of living, without compromising the principle of tightening financial discipline and building spending priorities with high precision. Ended 29/N33
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, said today, Saturday, that there are signs of an "oil glut" that may lead to a drop in prices this year to an average between 60-65 dollars a barrel, indicating that the drop in oil prices may raise the deficit in Budgeting to standard rates.
Saleh stated, "Indicators of oil markets in the world show that the cycle of oil assets is heading towards a decline, causing semi-deflationary price effects under two effects. Aggregate demand, especially in the energy-importing and consuming western economies, which affects the growth of demand for crude oil in the energy markets.
Saleh added, in an interview with the official news agency, followed by Mawazine News, that "the second effect comes in that the Russian Federation, as a party to the war with the West, has begun to market its oil to the markets of India, China and Asia at $ 20 less than global oil prices, which is a pattern of an undeclared price war." .
He continued, "The two factors constitute signs of an oil glut that may lead to a decline in oil prices this year to an average between 60-65 dollars a barrel, which may prompt the Organization of Petroleum Exporting Countries or the (OPEC Plus) group to maintain the stability of their countries' budgets by reducing something." of production according to members’ quotas, but the decision of OPEC Plus may contradict the hypothetical ceiling for oil prices adopted by Western economies from the parties to the war in Ukraine and energy consumers, specifically (NATO countries), which implicitly want to load part of the war bill on the shoulders of the oil-exporting countries and devour their surpluses from oil revenues."
Regarding the possibility of a decrease in oil prices and its impact on the budget, Saleh said, “The draft federal budget law for the year 2023, which was approved by the Council of Ministers in the past few days and was submitted for legislation to Parliament, which approved the price of a barrel of oil of $70 in order to evaluate oil revenues in the aforementioned budget. The possibility of oil prices falling below $70 per barrel of Iraqi oil, which will inevitably expand the planned deficit bill in the federal general budget, which is currently estimated at about 63 trillion dinars, and may raise the deficit to other record rates, adding between 8-16 trillion. Dinars to the aforementioned deficit balance in the event that expenditures remain on their current estimated status, especially when the average price of a barrel of exported oil reaches between 60-65 dollars per barrel.
And he continued, "The entire draft budget has become before the table of the House of Representatives, whose duties are to consider expenditures in light of the expected revenues before legislation," noting that "if the general budget law is legislated as approved by the Council of Ministers, the executive authority will face the possible possibilities of a cycle The oil assets themselves, but in a way that preserves the goals of the government program to protect and stabilize the standard of living, without compromising the principle of tightening financial discipline and building spending priorities with high precision. Ended 29/N33
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