With the euphoria of oil...the World Bank advises Iraq to be careful with its budget and warns of a “fragile economy”[You must be registered and logged in to see this link.] |Today, 20:35 [You must be registered and logged in to see this link.][You must be registered and logged in to see this image.]
Baghdad Today - Baghdad
Iraq is experiencing "relative" financial prosperity with a significant rise in oil prices, which is a major source of its financial imports. However, the World Bank's warning to Baghdad against "excessive" expenditures due to the huge deficit in its budget, of which crude oil constitutes 90% of revenues, puts the Iraqi economy in a cycle. “Anxiety and fears” about fluctuations in global market prices and depend on the geopolitical positions of exporting countries.
Professor of Political Economy, Jalil Al-Lami, revealed, today, Friday (September 22, 2023), that the World Bank called on the Iraqi government to be careful in disbursing the general budget allocations for fear of falling oil prices and harming the Iraqi economy, while stressing that the government is required to support the industrial and agricultural sectors and support... Non-oil revenues.
Al-Lami said, to “Baghdad Today,” that “the federal government has not released the full financial budget allocations for the year 2023 until now, because there are different opinions regarding them, especially after the recent issuance of the World Bank report, which described the general budget of Iraq as exaggerated and containing a large financial deficit.” ".
Fragile economy and price concerns
He stated, “The World Bank warned of the fragile Iraqi economy and called for addressing many issues and taking caution in disbursing the general budget allocations, for fear of falling oil prices and harming the country’s economy, and that the government focused on financing the operational side and the state’s basic needs in the food and health sector at the present time.”
Non-oil imports fall
Al-Lami added, "The state's non-oil imports during the first eight months of last year were more than one trillion and 260 billion dinars, and during the same period of this year, government revenues did not exceed (450) billion dinars, and this is a major decline."
He pointed out, “The World Bank urged the Iraqi government to support the idle non-governmental economic sectors on both sides of industry and agriculture in order to advance the Iraqi non-oil economy. Therefore, the government must seriously look at the sectors of industry, trade, agriculture, and even tourism and benefit from them in supporting the state’s financial imports.” ".
The private sector and thousands of stalled projects
The political economy expert stressed that the government must implement what it included in the general budget for 2023, that it will support the private sector in addition to granting merchants and contractors sovereign guarantees, in addition to supporting the private sector with the amount of (one trillion and one hundred billion dinars) that it has allocated to support this sector and operate medium and small projects. With the aim of advancing the industrial reality,” he stressed, “There are more than (18) thousand idle medium and small projects, and about (850) large industrial projects belonging to the state, which can be restarted, restored to life, and partnered with the private sector.”
He stated that the country needs plans to support the agricultural sector and provide government support to farmers, especially in terms of marketing agricultural products, crops and livestock, and to work along the lines of the national programs that were in place during the previous 1980s.
Al-Lami added that there are a large number of investment projects, especially in the field of constructing residential complexes, and that companies are bringing in labor from outside the country at the expense of local labor and those with academic degrees in various specializations, and the government should oblige investment companies and investors to comply with the investment law in terms of employing labor. Local employees must provide at least 75% of the workers they need.
Weak government support hinders investment
The economic expert criticized the lack of sufficient government support for industrial, commercial and agricultural projects, in exchange for providing significant support for investment in the field of building residential complexes, and granting facilities, especially in the ownership of large areas of land, in addition to granting the investor financial loans from government banks.
Government promises and popular aspirations
Prime Minister Muhammad Shiaa Al-Sudani revealed during his current visit to New York to attend the General Assembly meeting of the United Nations that the government is "working to reform the tax system and the customs system."
Al-Sudani informed members of the American Chamber of Commerce, in the presence of a number of businessmen, investors, and representatives of major American companies, during a meeting held on the sidelines of the United Nations General Assembly, that the government is “currently preparing a draft economic reform law that addresses gaps in several laws,” noting that “the government supported the private sector in the law.” The budget is through the Iraq Fund for Development, which has a capital of $750 million during 2023, and in 2024 we will add an additional amount.”
The Iraqis aspire to achieve their ambitions of providing services, completing urban projects, creating job opportunities, combating corruption and poverty, and improving living conditions, especially with the rise in oil prices, which currently exceed $90 per barrel, in addition to these are the promises of the current government, which described itself as a “services government.”
Source: Baghdad Today