[rtl]On Saturday, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, identified two main reasons for the decline in global oil prices, while stressing that the decline in oil prices may raise the budget deficit to record levels.
Saleh said, in a statement, that "the 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 influences. Economic growth and a contraction in aggregate demand, especially in the energy-importing and energy-consuming Western economies, which affects the growth of demand for crude oil in the energy markets.
He added, “The second effect comes in that the Russian Federation, as a party to the war with the West, has started marketing 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 pointed out, "The two factors constitute signs of an oil gluten that may lead to a return of oil prices in the current 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 some of the production according to the "as of the members", but the OPEC Plus decision may contradict the hypothetical ceiling for oil prices adopted by the Western agreements from the parties to the war in Ukraine and the 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 of oil revenues.
Regarding the possibility of a decrease in oil prices and its impact on the public budget, Saleh stressed that "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 the House of Representatives, 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 is exported, 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. One 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 Saleh 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 possible possibilities.” The cycle of oil assets by itself, but in a way that preserves the goals of the government program in protecting and stabilizing the standard of living, without compromising the principle of tightening financial discipline and building spending priorities with high precision. [/rtl]
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