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The recovery of oil markets and the fiscal surplus support the budget
Iraq 2023/03/19
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Hoda Al-Azzawi
Observers and politicians expressed optimism about the recovery of the oil markets during the coming period, which along with the fiscal surplus and the abundance of revenues generated for the country contribute to immunizing the budget and preserving it from any fluctuations that raise the risk of increasing the deficit in it, while experts in economics and finance expressed their reservations about some important details contained in the draft budget law. General for the years 2023/2024/2024, most notably the calculated price of a barrel of oil, as well as the planned deficit and its height.
A member of the Al-Fateh Alliance, Salam Hussein, said: "The budget will not suffer any deficit, especially since Iraq has a large financial surplus and abundant revenues, in addition to the fact that oil prices are high and may reach higher levels than they are at the present time."
For his part, the economist, Dr. Safwan Qusai, suggested that oil prices would witness "a rise in the coming days if Russia managed to prevent setting a ceiling for its oil prices in the global market," pointing out that "Russia will not be subject to European sanctions, just as (OPEC) It was determined to maintain the same reductions at the same rate, and therefore there is no increase in oil pumping, nor is there a decrease, and an increase in the demand for oil is expected, and therefore oil prices are likely to not fall below $72 a barrel, especially since Washington announced that it You will buy oil if it reaches this price.”
In contrast to the optimistic opinions, the expert on economic affairs, Nabil Al-Marsoumi, believes, in an interview with "Al-Sabah", that "the planned deficit in the budget is more than 63 trillion dinars, and it is noted that the price of a barrel of oil in the 2023 budget is not conservative, meaning that the Iraqi government did not hedge When I set $70 for a barrel of oil, which is the highest even for the budgets of oil countries - including the Gulf states - which adopted a price between $55 to $65 a barrel.
He noted that "failing to hedge by setting a high oil price leads to a deepening of the deficit in the public budget, especially since during the past two days we have witnessed a drop in the price of Brent crude to the level of $73 per barrel, and this means that Iraqi oil has become three dollars less than planned."
Al-Marsoumi suggested that “the second quarter of this year will witness a greater decline in oil prices,” calling for “reconsidering this price so that the deficit is not greater than 63 trillion dinars, which constitutes 20% of the gross domestic product, which is a number that is 3 or 7 times greater. The size of the deficit allowed for the government, which is established in the Financial Management Law at (3%),” explaining that “the biggest problem lies in how to finance this deficit from the surplus rounded balance specified in the budget at 23 trillion dinars, noting that the remaining 40 trillion dinars are from internal and external borrowing, And as we know, the size of the internal indebtedness is very large in Iraq, as it amounts to 70 trillion dinars, which adds great burdens to the budget. Rationalizing public expenditures and oil revenues so that the 2023 budget does not constitute a burden on the years
suffix".
The rapporteur of the Parliamentary Finance Committee for the fourth session, Dr. Ahmed Al-Saffar, stated in an interview with “Al-Sabah”: “The Ministry of Finance did not adhere to the specified percentage of the deficit mentioned in the Financial Management Law, which is supposed to not exceed 3% of the gross domestic product, and in Every year this percentage increases, in addition to the fact that all budgets after 2012 are unknown, as there are no final accounts in which it is possible to ascertain the extent of the use of public money, and whether the funds and allocations were spent in the areas for which they were allocated or not.
He pointed out that "the previous budgets did not aim to solve the economic problems that the Iraqi economy suffers from. The issue of unemployment, inflation and poverty increases year after year, just as dependence on oil revenues increases annually," wondering: "What will the budget look like and achieve in the future if its source is revenue?" Only oil and its fluctuating prices?
Edited by: Muhammad Al-Ansari
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