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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Iraq expects financial crisis in 2025 as oil prices fall

    Rocky
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    Iraq expects financial crisis in 2025 as oil prices fall Empty Iraq expects financial crisis in 2025 as oil prices fall

    Post by Rocky Tue 10 Sep 2024, 6:43 am

    Iraq expects financial crisis in 2025 as oil prices fall

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    Economy News - Follow-up
    Iraq will face a budget crisis in 2025 due to the drop in oil prices, the country’s main source of revenue, said Mazhar Mohammed Salih, a financial adviser to Iraqi Prime Minister Mohammed Shia al-Sudani. “We don’t expect major problems in 2024, but we need stricter fiscal discipline in 2025,” Salih told Reuters late on Monday in an interview.
    Iraq is OPEC’s second-largest crude oil producer, with an average daily output of 4.6 million barrels per day under normal conditions outside of production cut agreements. Iraq’s crude exports averaged 3.48 million barrels per day in July and 3.41 million barrels per day in June, while on Sunday it announced plans to raise output to 6 million barrels per day by 2028. Iraq, OPEC’s second-largest oil producer, relies heavily on oil revenues. The hydrocarbon sector accounts for the vast majority of export earnings and about 90 percent of state revenues. This heavy reliance on oil makes Iraq particularly vulnerable to fluctuations in global crude prices. However, Iraq has increased its budget in 2024 even after record spending in 2023 when more than half a million new employees were hired in the already bloated public sector and a massive infrastructure upgrade began across the country.
    Saleh said the 2024 budget had risen to 211 trillion dinars ($161 billion), from 199 trillion dinars ($153 billion) in 2023, with a projected deficit of 64 trillion dinars. The government projects oil prices to be $70 a barrel in 2024, about $6 less than the average price this year. Saleh added that paying salaries and pensions on time remains a top priority. Salaries and pensions cost 90 trillion dinars ($69 billion), more than 40 percent of the budget, and are a key factor in social stability in Iraq. “The government will pay salaries even if it costs it everything. Salaries are sacred in Iraq,” he said.
    He said that infrastructure development could focus on more strategic projects, such as major roads and bridges in the capital Baghdad, if the country finds itself in a financial crisis. He added that Iraq is trying to improve its financial situation by increasing non-oil revenues through improved tax collection, but is not considering imposing any new taxes. Salih estimated that Iraq loses up to $10 billion annually due to tax evasion and customs-related problems.
    Economic researcher Ahmed Sabah said in previous statements to Al-Araby Al-Jadeed that the drop in oil prices to below $70, with Iraq’s commitment to its production level pledges to OPEC and reducing it to 3.3 million barrels per day, will lead to major negative results. Sabah pointed out that monthly oil revenues have declined to nine trillion dinars, eight trillion of which will go to finance employee salaries, while the remaining funds will be allocated to cover the expenses of oil licensing companies, finance food ration card items, and other operational and investment expenses.
    Concerns over the 2025 budget reflect challenges facing the global oil market. Oil prices have been on a downward trend since mid-2022, with Brent crude falling from over $120 a barrel to below $75 in the past few days. The decline is largely due to weak global demand, especially from China, the world’s largest oil importer, as its economic growth slows.


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