Government Abadi mortgaging the country 's economy to foreign companies

22-02-2016 10:55 PM

Are free -

All doors are closed to the Iraqi government, the continued support of six thousand project, due to a lack of funds after the fall in oil prices, which made them tend to mortgage the country's economy to foreign companies through the awarding of important projects to funding long-term, which is characterized by high interest rates, in exchange for installment payments . However, the economist, warned of this procedure, especially with the spread of phantom projects because of rampant corruption in the state. He says a spokesman for the Ministry of Planning Abdul-Zahra al-Hindawi 'government was forced to resort to term funding, as a result of the recession, which is currently hit the economy, since the idea of ​​project financing on credit is not new, it has raised in the previous government's time, when the economic situation was better than now. But the government did not proceed with the implementation of the subject for fear of the economy outside of any companies'.

He adds: 'Today, the critical economic situation experienced by Iraq, because of the decline in oil prices, exacerbating the budget deficit, so the principle of financing on credit approved by the parliament.' Hindawi confirms that the '2016 budget stipulated funding on credit for new projects, although they are free of any new project, due to the financial crisis, so it forced the government to put a number of conditions after discussions took place between the Ministries of Planning and Finance and the Council of Ministers, highlighted by the presentation of projects that have reached completion to the proportion of 50% financing on credit. ' Hindawi indicates that the conditions that were agreed upon provides for the size of the project not to exceed two billion dollars, as there is no specific cap on the number of projects, and to be the interest rate up to 6%, and interest is calculated on the amount spent after three years'. According to al-Hindawi, the term financing projects will focus on important sectors that serve people's lives, such as energy and services through roads, health, water and sanitation and to improve the power supply development. Furthermore, the Iraqi government is holding talks with representatives of the Japanese, Chinese, French, Italian and Kuwaiti and Iranian companies to finance projects stalled on credit, but the concern is still in control of all the companies because of the economic, political and security conditions.

Financing on credit

On the other hand, economists in parliament is trying to mitigate financing risks on credit, the justification that it will be reflected positively on the citizens, even though the government did not comply with the recommendations of Parliament from the financial cost side. According to a member of the parliamentary economic committee Najiba Najib, the parliament approved in 2015 to finance projects on credit after seven thousand project stopped, and after it has reached the proportion of what has been accomplished to 80%. She says' Parliament stipulated that the government should not go beyond financing projects forward value of 5 trillion dinars (4.16 billion dollars), and the Iraqi government developed a preliminary instructions, and called on companies to negotiate to finance projects needed by the country in the current period, in particular those related sectors of electricity, transport, education, banner that 'these projects will be limited to only Baghdad and the southern provinces. " Does not agree economist Abdel Azim al-Khafaji, with the direction of the Iraqi state to resort to term financing for projects stalled 'because they failed and fake projects'. He says al-Khafaji: 'It turns out when you re-evaluation of projects lagging that economic viability is weak, and that 90% of these projects do not reach completion rates of more than 10%', adding 'that insist on the wrong crime against the Iraqi people, because the current borrowing will cost the Treasury money Chapter '. Khafaji and confirms that the majority of funding forward contracts marred by corruption, because the cost of completion outweigh the actual cost many times. While sees economics professor at the University of Baghdad, Ehsan Jaber, the term financing through foreign companies will have a positive and negative two effects, and is positive to inject additional hard currency and resolve the public sector crisis. The negative impact, 'would be by paying very high interest rates, which increases the financial burden on the present and future generations has pledged the entire economic activity burdens of interest payments and installment debt'.