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A government advisor who reduces the risks of budget deficit
Economical 2023/05/09
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Haider Fleeh Al-Rubaie
The financial advisor to the Prime Minister, Dr. Mazhar Muhammad Salih, underestimated the potential risks of a “hypothetical fiscal deficit” in the public budget, despite it exceeding the barrier of 64 trillion dinars, attributing this to the continuation of oil sales rates above the calculated price per barrel in the budget, which amounts to 70 dollars, and approaching the middle of the year. Finance, stressing the need for high discipline in spending, and he considered that financial rationalization to be counted among the indicators of performance evaluation and financial governance.
Despite the assurances given by the government advisor about the effects of the budget deficit and the economy in general, economists believe the opposite, as a number of specialists expressed their fear that the deficit would reach nearly 20% of the gross domestic product, stressing that this percentage is a violation of the Financial Management Law. No. (6) for the year 2019 as amended.
Economic specialists rely on the steps they described as "important" in implementing the government's approach, especially moving the wheels of industry and agriculture, stressing that this approach can reduce dependence on oil revenues to support budgets, and mitigate the risks of deficit in the event of a decline in global oil prices.
And Saleh based his reassurances on "the arrival of the fifth month of the fiscal year, and the average sales of Iraqi oil are still higher than the price specified in the draft federal budget law for the current year 2023 and subsequent years, which amounts to $70 per barrel of exported oil."
Saleh indicated during his interview with "Al-Sabah" that "according to these data, the expected financial risks, if they occur, will have a less severe impact on the hypothetical deficit estimates for the average fiscal year 2023, and in the event of price fluctuations of about $70 per barrel of crude oil, or even Less than that price, during the second half of the current fiscal year, at which point the budget resorts to financing parts of that deficit by internal borrowing from the market
banking".
Saleh believes that among the measures by which it is possible to confront the fiscal deficit in public budgets is the continuation of strictness and high discipline in enhancing non-oil revenues, and considering collection from non-oil revenue vessels (without delay) a first priority in evaluating the work of the state’s financial joints, as well as The importance of scrutinizing the exchange from the approved allocations in the exchange chapters and imposing high discipline on spending, specifically the ministries and spending agencies or exchange units, which should be careful in spending, and this is considered an important financial rationalization that is counted within the indicators of performance evaluation and high-quality financial governance.
Contrary to the opinion of the government advisor, the researcher in economic affairs, Bassam Raad, pointed out during his interview with "Al-Sabah" that "the enormity of the planned deficit in the 2023 budget is a complex and complex phenomenon, and there is an interconnected network of factors that contributed to this planned deficit, and at the forefront of this Factors Classify the Iraqi economy as a service, distribution, poor production, in addition to the changes that occurred as a result of the growth of expenditures
the public".
The seriousness of this deficit, according to researcher Raad, lies in the financing sources for bridging the deficit gap, which were identified through internal and external borrowing, stressing that this step could burden the budgets of the coming years by paying the installments and interest due for these loans, indicating that the ways to reduce the effects of this The deficit calls for searching for other sources of revenue to meet the growing expenditures and reduce the deficit gap, in addition to rationalizing spending and increasing the productive efficiency of public spending.
The spokesman pointed out that "the proportion of the planned deficit in the draft budget for the year 2023 amounts to (20%) of the gross domestic product, which is contrary to the Financial Management Law No. (6) of 2019 as amended (Article 4, Paragraph / Fourth), which stipulates that" it is not permissible to The planned deficit in the planning budget exceeds
(3%) of the gross domestic product," according to the economic researcher, who also indicated that "the deficit in the general budget is one of the factors that determine Iraq's economic capabilities in the credit rating. for the country.”
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