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Fears of the collapse of oil prices and the delay in the budget put Iraq on an "uncharted road"
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2023-04-02 02:17
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Shafaq News/ Although the Iraqi Council of Ministers, since last March 13, referred the draft budget law for the years 2023, 2024, and 2025 to the Parliament, the Presidency of Parliament did not transfer the draft law to the Finance Committee for discussion and then presenting it to the Parliament for a vote until today. .
Specialists attribute this delay to the tensions and disagreements between some political blocs, especially the Sunni parties, which are trying to find solutions to other outstanding issues through "bargaining" on the budget law, in addition to understandings with the Kurds and the percentage of their share in it. It is also expected that there will be obstacles for independent parties and representatives. Independents to protest the passing of the recent election law.
The delay in approving the budget causes negative repercussions on economic activity from various aspects, in light of the “total paralysis” witnessed by the private sector, due to the suspension of government funding and projects, the disruption of job bonuses and promotions, the dollar crisis and other negatives that are reflected in purchasing power and a decrease in living standards in all governorates. Iraq, according to specialists.
Absent balance
Adviser to the Prime Minister for Financial Affairs, Dr. Mazhar Muhammad Salih, says, "Iraq has entered the fifth chapter of its financial life without the availability of a federal law for the general budget until now, as the joints of the national economy with its projects and programs are still looking forward to enacting the Federal General Budget Law for the year 2023."
Saleh added to Shafaq News agency, "The absence of the general budget law over a year and a half, constitutes an ambiguous image for decision-makers in the investment and business sectors of civil activity, due to the interdependence of the state's new projects and programs with intertwined relations with market forces, especially the labor, equipment and contracting markets." and others.”
And he continues, “Government investment spending is an important accelerating lever in the growth of income and employment opportunities and market stability, because government spending has a high impact force on all aspects of economic activity, whether directly or indirectly, and with significant impact rates that reach 80% of employment and demand cases.” aggregate in the economy.
Based on the foregoing, "the clarification of the country's legislative financial picture, and the launch of its effects and tools through the general budget, are linked to an important connection with the increase in general economic activity, and the stability of private sector decisions, or the market economy in particular," according to the Prime Minister's Advisor for Financial Affairs.
Saleh explains, "The country's financial policy has adopted medium-term financial planning by presenting a draft budget for the two years 2024-2025, which, if enacted, will provide high information efficiency that helps investment opportunities and market makers in particular to build their decisions high and early, which is something that strengthens at the time Undoubtedly, it will provide employment opportunities and encourage economic growth.”
Budget disputes
A member of the Parliamentary Finance Committee, Representative Thamer Al-Hamdani, indicates that “the draft budget law for the three years was received by the Presidency of Parliament from the government nearly a month ago, but the Presidency did not transfer it to the Finance Committee until it is discussed and presented for voting in the House of Representatives until today. Because of the tensions and disagreements between some political blocs.
Al-Hamdani told Shafaq News agency, "Some political blocs believe that the budget should be for one year, while others believe that the three-year budget will give political and economic stability."
A member of the Finance Committee confirms, "The size of the budget and the percentage of its deficit are large, but it is possible to discuss it in the Finance Committee, reduce the deficit and the amount of the budget, and address some of the lapses in it, so that it is a safe budget, especially there is a fear of a crisis due to the drop in oil prices."
Al-Hamdani expressed his hope that "the Presidency of Parliament will refer the budget law to the Finance Committee during the next few period, so that the committee in turn will start holding meetings to complete it and present it to the House of Representatives for a vote, so that the stage of direct implementation of the government program begins according to what is included in the budget."
Regarding the fears of the three-year budget, the deputy pointed out that "these fears are due to the regional and international situation, and the harbingers and problems surrounding Iraq, from the possibility of a drop in oil prices due to the lack of market stability, as well as the issue of dollar exchange rates, and this fear is more peaceful than political. Because everyone wants to serve on the condition that there is sobriety and reassurance of the budget law.
The repercussions of the budget delay?
The delay in approving and enacting the budget law causes negative repercussions on the market and monetary movement from various aspects, and greatly affects economic activity, according to researcher in economic affairs, Ahmed Eid.
Eid added to Shafaq News agency, "Many economic and monetary activities are suspended, including job bonuses and promotions, in addition to the issue of balancing the job ladder and raising salaries compared to the rise in inflation levels the country is witnessing, in addition to the significant increase in poverty rates in all governorates of Iraq." .
He explains, "All of this is reflected in the purchasing power and the decline in living standards, in addition to the disruption of many economic projects, and the decline in the size of the balance of payments."
Other influences
Another negative effect of the delay in the budget is that "the private sector is currently in a state of complete paralysis due to the cessation of government funding and the cessation of launching projects, whether service, investment or even operational, as a result of the association of most of the corporate sector with the government sector," according to the economist, Dr. Ahmed Fouad.
Fouad added to Shafaq News agency, "There is confusion and anxiety prevailing among employees because of rumors that appear about salaries and allocations, in addition to new job grades, and the salary scale to be changed, and this waiting, as it increases, will negatively affect the price rise and the crisis of the US dollar, which is linked to a large part of it." at the dollar exchange rate in the budget.
When is the budget approved?
Fouad points out, "The approval of the budget is expected after the next Eid al-Fitr, but there are some expected delays due to the struggle of political parties among themselves over the approval of a number of laws, especially the Sunni parties that are working to find solutions to other outstanding issues by bargaining over the budget law."
Among other obstacles, the economist states, "the understandings with the Kurds and their share of the budget and the financial releases that the Sudanese government secretly promised to them, and there are also expected obstacles by independent parties and independents due to the passing of the recent election law."
Fears of a collapse in oil prices
The oil expert, Hamza Al-Jawahiry, explains that "Oil is a strategic commodity, as it is very important for the perpetuation of the wheels of production and life in all countries without exception, and now European countries are going through a crisis as a result of the war in Ukraine, and most of them are non-oil-producing countries, as they import oil, with the same Time pays very high bills as a contribution to the Ukrainians, who are fighting the most powerful country in the world in terms of military terms, so they found themselves in a real dilemma to bear the high bills of war and energy.
Al-Jawahiry added to Shafaq News agency, "Therefore, Western countries in general stand in a real confrontation with OPEC Plus, and the aim of this entrenchment is to reduce energy bills, but the positions of OPEC Plus countries, on the other hand, are very strong, as they are defending their most important strategic commodity in the world."
And he continues, "None of the two parties can resolve the confrontation in his favour, because they have effective tools in this confrontation, hence the fears that oil prices could collapse at any time, and the biggest affected will be Iraq, as it depends on oil revenues to supply the budget by a percentage." 95%, while the rest of the OPEC plus countries have other financial resources, not as is the case with Iraq, the rentier state par excellence.
And he explains, "From this standpoint, we see the need for the default price of oil in the budget to be no more than $50, and it is preferable for the price to be $45 per barrel."
On March 13, the Iraqi Council of Ministers approved the draft budget law for the years 2023, 2024, and 2025, and referred it to Parliament.
The 2023 budget is the largest in the history of Iraq after 2003, and Prime Minister Muhammad Shia’ al-Sudani said that its total amounted to more than 197 trillion dinars (135 billion dollars), including an operational budget of more than 150 trillion dinars, and an investment budget of about 47 trillion.
The estimated deficit rate is close to 63 trillion Iraqi dinars, and the total expected revenues are equivalent to more than 134 trillion dinars, while oil revenues are estimated at 117 trillion dinars based on an oil price of $70, while non-oil revenues amount to 17 trillion.
The last budget approved in Iraq dates back to April 2021, while one was not adopted in 2022 due to the political turmoil that paralyzed the country for a year after the last legislative elections.
[You must be registered and logged in to see this link.]
[You must be registered and logged in to see this image.]
2023-04-02 02:17
Share
Font
Shafaq News/ Although the Iraqi Council of Ministers, since last March 13, referred the draft budget law for the years 2023, 2024, and 2025 to the Parliament, the Presidency of Parliament did not transfer the draft law to the Finance Committee for discussion and then presenting it to the Parliament for a vote until today. .
Specialists attribute this delay to the tensions and disagreements between some political blocs, especially the Sunni parties, which are trying to find solutions to other outstanding issues through "bargaining" on the budget law, in addition to understandings with the Kurds and the percentage of their share in it. It is also expected that there will be obstacles for independent parties and representatives. Independents to protest the passing of the recent election law.
The delay in approving the budget causes negative repercussions on economic activity from various aspects, in light of the “total paralysis” witnessed by the private sector, due to the suspension of government funding and projects, the disruption of job bonuses and promotions, the dollar crisis and other negatives that are reflected in purchasing power and a decrease in living standards in all governorates. Iraq, according to specialists.
Absent balance
Adviser to the Prime Minister for Financial Affairs, Dr. Mazhar Muhammad Salih, says, "Iraq has entered the fifth chapter of its financial life without the availability of a federal law for the general budget until now, as the joints of the national economy with its projects and programs are still looking forward to enacting the Federal General Budget Law for the year 2023."
Saleh added to Shafaq News agency, "The absence of the general budget law over a year and a half, constitutes an ambiguous image for decision-makers in the investment and business sectors of civil activity, due to the interdependence of the state's new projects and programs with intertwined relations with market forces, especially the labor, equipment and contracting markets." and others.”
And he continues, “Government investment spending is an important accelerating lever in the growth of income and employment opportunities and market stability, because government spending has a high impact force on all aspects of economic activity, whether directly or indirectly, and with significant impact rates that reach 80% of employment and demand cases.” aggregate in the economy.
Based on the foregoing, "the clarification of the country's legislative financial picture, and the launch of its effects and tools through the general budget, are linked to an important connection with the increase in general economic activity, and the stability of private sector decisions, or the market economy in particular," according to the Prime Minister's Advisor for Financial Affairs.
Saleh explains, "The country's financial policy has adopted medium-term financial planning by presenting a draft budget for the two years 2024-2025, which, if enacted, will provide high information efficiency that helps investment opportunities and market makers in particular to build their decisions high and early, which is something that strengthens at the time Undoubtedly, it will provide employment opportunities and encourage economic growth.”
Budget disputes
A member of the Parliamentary Finance Committee, Representative Thamer Al-Hamdani, indicates that “the draft budget law for the three years was received by the Presidency of Parliament from the government nearly a month ago, but the Presidency did not transfer it to the Finance Committee until it is discussed and presented for voting in the House of Representatives until today. Because of the tensions and disagreements between some political blocs.
Al-Hamdani told Shafaq News agency, "Some political blocs believe that the budget should be for one year, while others believe that the three-year budget will give political and economic stability."
A member of the Finance Committee confirms, "The size of the budget and the percentage of its deficit are large, but it is possible to discuss it in the Finance Committee, reduce the deficit and the amount of the budget, and address some of the lapses in it, so that it is a safe budget, especially there is a fear of a crisis due to the drop in oil prices."
Al-Hamdani expressed his hope that "the Presidency of Parliament will refer the budget law to the Finance Committee during the next few period, so that the committee in turn will start holding meetings to complete it and present it to the House of Representatives for a vote, so that the stage of direct implementation of the government program begins according to what is included in the budget."
Regarding the fears of the three-year budget, the deputy pointed out that "these fears are due to the regional and international situation, and the harbingers and problems surrounding Iraq, from the possibility of a drop in oil prices due to the lack of market stability, as well as the issue of dollar exchange rates, and this fear is more peaceful than political. Because everyone wants to serve on the condition that there is sobriety and reassurance of the budget law.
The repercussions of the budget delay?
The delay in approving and enacting the budget law causes negative repercussions on the market and monetary movement from various aspects, and greatly affects economic activity, according to researcher in economic affairs, Ahmed Eid.
Eid added to Shafaq News agency, "Many economic and monetary activities are suspended, including job bonuses and promotions, in addition to the issue of balancing the job ladder and raising salaries compared to the rise in inflation levels the country is witnessing, in addition to the significant increase in poverty rates in all governorates of Iraq." .
He explains, "All of this is reflected in the purchasing power and the decline in living standards, in addition to the disruption of many economic projects, and the decline in the size of the balance of payments."
Other influences
Another negative effect of the delay in the budget is that "the private sector is currently in a state of complete paralysis due to the cessation of government funding and the cessation of launching projects, whether service, investment or even operational, as a result of the association of most of the corporate sector with the government sector," according to the economist, Dr. Ahmed Fouad.
Fouad added to Shafaq News agency, "There is confusion and anxiety prevailing among employees because of rumors that appear about salaries and allocations, in addition to new job grades, and the salary scale to be changed, and this waiting, as it increases, will negatively affect the price rise and the crisis of the US dollar, which is linked to a large part of it." at the dollar exchange rate in the budget.
When is the budget approved?
Fouad points out, "The approval of the budget is expected after the next Eid al-Fitr, but there are some expected delays due to the struggle of political parties among themselves over the approval of a number of laws, especially the Sunni parties that are working to find solutions to other outstanding issues by bargaining over the budget law."
Among other obstacles, the economist states, "the understandings with the Kurds and their share of the budget and the financial releases that the Sudanese government secretly promised to them, and there are also expected obstacles by independent parties and independents due to the passing of the recent election law."
Fears of a collapse in oil prices
The oil expert, Hamza Al-Jawahiry, explains that "Oil is a strategic commodity, as it is very important for the perpetuation of the wheels of production and life in all countries without exception, and now European countries are going through a crisis as a result of the war in Ukraine, and most of them are non-oil-producing countries, as they import oil, with the same Time pays very high bills as a contribution to the Ukrainians, who are fighting the most powerful country in the world in terms of military terms, so they found themselves in a real dilemma to bear the high bills of war and energy.
Al-Jawahiry added to Shafaq News agency, "Therefore, Western countries in general stand in a real confrontation with OPEC Plus, and the aim of this entrenchment is to reduce energy bills, but the positions of OPEC Plus countries, on the other hand, are very strong, as they are defending their most important strategic commodity in the world."
And he continues, "None of the two parties can resolve the confrontation in his favour, because they have effective tools in this confrontation, hence the fears that oil prices could collapse at any time, and the biggest affected will be Iraq, as it depends on oil revenues to supply the budget by a percentage." 95%, while the rest of the OPEC plus countries have other financial resources, not as is the case with Iraq, the rentier state par excellence.
And he explains, "From this standpoint, we see the need for the default price of oil in the budget to be no more than $50, and it is preferable for the price to be $45 per barrel."
On March 13, the Iraqi Council of Ministers approved the draft budget law for the years 2023, 2024, and 2025, and referred it to Parliament.
The 2023 budget is the largest in the history of Iraq after 2003, and Prime Minister Muhammad Shia’ al-Sudani said that its total amounted to more than 197 trillion dinars (135 billion dollars), including an operational budget of more than 150 trillion dinars, and an investment budget of about 47 trillion.
The estimated deficit rate is close to 63 trillion Iraqi dinars, and the total expected revenues are equivalent to more than 134 trillion dinars, while oil revenues are estimated at 117 trillion dinars based on an oil price of $70, while non-oil revenues amount to 17 trillion.
The last budget approved in Iraq dates back to April 2021, while one was not adopted in 2022 due to the political turmoil that paralyzed the country for a year after the last legislative elections.
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