Causes and effects of potential loan of the International Monetary Fund for Iraq |
[You must be registered and logged in to see this image.] |
Public loans is one of the public finance policies resorted to by developed and developing countries alike, to cover public expenditure (current or investment or both) that fail to domestic financial resources for its coverage, these loans are not exempt from the effects of which can be let go, whether positive or negative and the producers or consumers, and the current or future generations ... etc. It's important to leave a clear impact, and this prompted some study and analysis of the causes and potential effects of the IMF loan to Iraq of $ 13 billion which was agreed upon which falls on Thursday 19/05/2016 after negotiations lasted for four days. There are reasons why Iraq resort to borrowing from the United Nations, the International Monetary Fund, a low necessary to cover the overhead of local resources, since it is known that the Iraqi economy depends and very significantly in the financing of the general budget on oil resources (which contribute more than 97% of the total public revenues in 2013 and earlier during the recovery of oil prices, but fell with the drop in oil prices to make up more than 83% and 85% of total public revenues in 2015 and 2016, respectively) which are to fluctuate as a result of fluctuations that occur on the prices on the one hand, the hand Other oil prices are determined by external factors (global markets), and thus can not be controlled, any fluctuation affects prices quickly reflected in the decline in oil revenues, which represent President supplier to cover overhead, are resorting to borrowing. As well as the low volume of tax revenue which is the indicator of how the economy develops or not, as the agricultural and industrial economic activities, construction, electricity, etc., whenever they are more productive and able to compete with foreign goods similar, whenever helped to increase tax revenue further, and this is what helps cover public expenditure without resorting to borrowing, but this did not happen in Iraq, as tax revenue accounted for only 2.29% of the total public revenues in 2013 and then improved to constitute approximately 6% and 6.96% of the total public revenues in 2015 and 2016 respectively, and this the improvement was due to lower oil prices, but the result even with the improvement in tax rates has been to resort to borrowing because of the very low contribution taxes in the budget. Iraq that also did not work to increase only capital expenditures but also reduce the proportion of 39.81% in 2013 to 34.49% and 27.14% of the total public expenditure in 2015 and 2016 respectively, and continued to increase the size of the operating expenses (current) of 60.18% in in 2013 to 75.68 of the total public expenditure in 2016, particularly military expenditures (Ministry of Interior and Defence) to meet the organization Daash terrorist, as contribution from 13.82% in 2013 rose to 16.84% of the total public expenditure in 2016, and this is what leads to an increase domestic demand as a result of inflexibility Iraqi production device, any lack of production growing demand for a response, so it will meet domestic demand from abroad by increasing imports, and this adversely affects the balance of payments situation (ie, for the case of the deficit). Iraq is required to further external borrowing to finance the balance of payments deficit on the one hand, the impact of imports on the competitiveness of similar domestic goods that did not bear more taxes because any increase in the size of the tax would have an impact adversely on the level of economic activity on the other.Iraq did not contribute to building the productivity of a variety of active base contribute to the construction of the vessels in order to tax the state can impose taxes in the shadow of the drop in oil prices, exceptional circumstances, so that the face of declining oil revenues, which is funded by the president to meet the needs of public expenditures. As well as corruption in all its forms, administrative, financial and economic causing wastage of financial resources, as the annual report is a summary of the Integrity Commission for 2015 indicates that public funds recovered worth (32,528,859,617) Iraqi dinars, through the conduct of investigative actions in a number corruption cases, while the public funds that were sentenced to judicial its response to the state treasury (63,283,302,513) Iraqi dinars. The money that prevented the body wastage and stop dispensing preserve public money through investigative procedures have reached (1,068,493,924,006) Iraqi dinars. For example, the oil ministry to prepare a study completed in 03.23.2015 for losses due to waste, neglect and mismanagement in oil production operations, because those losses were estimated Around (14.5) billion US dollars for the period from 2011 to the end of 2014, this what was expressed by oil Minister Adel Abdul-Mahdi, "this is the real corruption ... this is the real major losses and waste of funds" and there are an estimated amount of waste trillion dollars from 2006-2015 in the field of energy just how other areas? !!!. These figures indicate the extent of corruption in Iraq, which caused a decline in the volume of public revenue and thus increase the deficit in the public budget size and this is what pays about borrowing to meet public spending requirements. The economic impact of IMF loan Lies diagnosis effects left by external borrowing, $ 13 billion, the Iraqi economy is based on two points: the first point is the conditions attached to the loan in terms of both the benefits and the size necessary to repay the loan principal annual installments or in terms of conditions set by the international institutions of any IMF international as a prelude for borrowing, and these conditions danger lies in the mortgage and subordination of the Iraqi economy to international institutions and loss of independence. Because the lower the interest, the size of the annual premium is low, the more increases the ability of the Iraqi economy on the face of external borrowing and service (but after the compatibility with the second point) and vice versa, but what happened in this loan is that the loan interest was very low as it did not exceed 1.5%. were also identified for repayment of the loan within a period of five years, but after three years opacity grace, which does not repay the loan as soon get the country on the loan and allowed him to start paying the loan after three years, and the rate represents 7% to GDP and this is what It means that it falls within the optimal size of public debt as the 60% of GDP, is in many countries and economic unions acceptable ratio according to the international Monetary Fund and international standards. The head of the Commission of Economy and Parliamentary investment, Jawad al-Bolani, on Tuesday ratified May 17, "The IMF did not impose conditions on Iraq in return for lending, as some believe, but gave a vision to address the significant problems of the national economy, as a result of its dependence on oil only "noting that" the fund wants the Iraqi government to reduce its spending and focus on productive sectors to enhance budgetary resources. " The advantages of this loan make Iraq lucky to get it, and should be employed optimally to revive the Iraqi economy and stand on its feet, as it may not get foreign loans possess benefits available under this loan. The second point which is the activities that are directed towards foreign borrowing, they are investing activities (capitalism) or consumer (operational)? If the loan was directed towards investment activities will lead to the recovery of the Iraqi economy through the activation of inert such as agriculture, industry, manufacturing, tourism and other sectors, and building tax vessels able to afford the tax burden to cope with continued loan and its benefits, but if the loan was about consumer activity guide will lead to inflation, the emergence of even slightly, on the one hand, and on the other hand, the problem lies in the loan geared toward consumer activities is limited to the lack of production base to build reliable in paying back the loan and its benefits at the time of payment solutions. The economic impact of foreign borrowing Pass the economic effects left by the external loan in three stages: The first is to get the $ 13 billion external loan, which could be the Iraqi state used to strengthen the cash reserve Albala $ 54 billion to become the $ 67 billion sum, this will support the strength of the Iraqi dinar and thereby reduce the low purchasing power and not to the general price level to rise. But if the use of external loan for the purchase of goods and services, the effects left by the (loan) on the Iraqi economy is depending on the type of imported goods, it was the consumer that will increase the supply of these goods (consumer) and thus prevent inflation, though investment that will lead to expansion in the investment and raise the level of income. The second external loan spending phase, if the Iraqi economy to infuse this loan will lead to a state of inflation as a result of competitive individuals in the state to obtain goods and services on the one hand, and lack of flexibility of the production machinery on the other hand. And vice versa in the case of flexible production machine will result in the injection to achieve an increase in real output without for inflation. But even in the absence of the Iraqi flexible production machine will not get inflation, but simple borders, due to the leakage of any element is to meet the increasing domestic demand through imports. The third phase of the payment of external loan, the repayment of IMF loan and its benefits, requires a truncated portion of the purchasing power of consumers or producers of Iraqis and transfer to the International Monetary Fund to meet the continued payment of the loan and its benefits. Imposing taxes on consumption would reduce the amount of savings and then high interest rates and low investment and low gross national product size rates, and the terms imposed on producers, it is working to increase the production of local commodities costs and thus higher prices and therefore it can not compete with foreign goods at home or abroad Vtaatahtm local industries are resorting to outside to fill this local medicine on one hand, are usually repay foreign loans in foreign currency which negatively affects the dinar, Iraq's exchange rate, which leads to the events of a deficit in the balance of Iraq's payments on the other hand, the price, and both standpoints Tathera negatively on Iraqi economy. The social effects of foreign borrowing The social effects of foreign borrowing on the nature of the tax structure is based, if the tax system is based on indirect taxes, as is the case in developed countries, the Stoic true to the loan principal and interest are layered with high incomes and especially if coincided with the imposition of progressive taxation and this leads to a redistribution of income toward classes limited income, and vice versa, as is the case in developing countries and Iraq, including, any are re-distribution of national income towards high-income classes when the tax system is based on indirect taxes becomes then a real Stoic to the loan principal and interest are the low-income classes, the fact that the marginal propensity consumption is high among these classes, especially if it coincided with the imposition of top-down taxes. For example, the direct tax rate represents 32.81% of the tax revenue in 2015, while indirect taxes make up 67.18% of the tax revenue for the same year, this means that the repayment of the loan value and benefits in Iraq be borne by low-income classes as well as higher propensity marginal consumption, which is approaching the right one. Hamid al-Jubouri / Euphrates Center for Development and Strategic Studies [You must be registered and logged in to see this link.] |
Causes and effects of potential loan of the International Monetary Fund for Iraq
Rocky- Admin Assist
- Posts : 267081
Join date : 2012-12-21
» Tomorrow .. starting a new round of talks between Iraq and the International Monetary Fund
» Iraq discuss with the launch of the International Monetary Fund for a new batch of loan
» The International Monetary Fund acknowledges conditional loan to Iraq worth $ 1.24 billion
» Finance: Iraq will receive more than a billion dollars loan from the International Monetary Fund
» Finance Minister to “Nass”: Iraq no longer needs an International Monetary Fund loan
» Iraq discuss with the launch of the International Monetary Fund for a new batch of loan
» The International Monetary Fund acknowledges conditional loan to Iraq worth $ 1.24 billion
» Finance: Iraq will receive more than a billion dollars loan from the International Monetary Fund
» Finance Minister to “Nass”: Iraq no longer needs an International Monetary Fund loan
|
|
Today at 7:52 am by Rocky
» utube 3/28/24 MM&C Iraqi Dinar - IQD Update - SWIFT - Purchasing Power - Urban Renaissance - Releas
Today at 7:51 am by Rocky
» Al-Mandalawi: Iraq is witnessing competition between major companies...and the House of Representati
Today at 7:49 am by Rocky
» The President of the Republic stresses the importance of the role of programmers in developing the w
Today at 7:46 am by Rocky
» The Minister of Industry and Minerals follows up on the technical and production performance of the
Today at 7:45 am by Rocky
» The Minister of Finance is following up on the field the progress of the newly implemented ASYCUDA s
Today at 7:44 am by Rocky
» Statistics: There are more than 15 million bank accounts in Iraq
Today at 7:42 am by Rocky
» Representative: One paragraph hinders the passage of a general amnesty within the House of Represent
Today at 7:37 am by Rocky
» Parliamentary Finance: “The draft federal budget law will be devoid of new job grades.”
Today at 7:36 am by Rocky
» Parliamentary action to resolve the fate of “food security contracts” in 15 governorates
Today at 7:35 am by Rocky
» 300 factories turned into "iron scrap" in Diyala
Today at 7:34 am by Rocky
» A deputy expects the dollar exchange rate to reach 140 Iraqi dinars
Today at 7:32 am by Rocky
» Al-Yasiri: The American administration is working hard to destroy the Iraqi economy
Today at 7:31 am by Rocky
» Infographic: The highest annual salaries of leaders of Arab countries
Today at 7:30 am by Rocky
» Communications announces that the electronic signature project has reached advanced stages
Today at 7:29 am by Rocky
» Parliamentary Integrity presents a file related to Kuwaiti violations of Iraqi oil
Today at 7:27 am by Rocky
» Parliamentary move to include amendments to Parliament’s internal regulations on the agenda (documen
Today at 7:25 am by Rocky
» The Iraqi President urges the Minister of Finance to expedite the payment of salaries to the Kurdist
Today at 7:23 am by Rocky
» Central Bank of Iraq sales exceeded $251 million at today’s auction
Today at 7:21 am by Rocky
» The Foreign Minister questions the "Iraqi resistance" attacks against Israel: the other side did not
Today at 7:20 am by Rocky
» The Minister of Labor announces progress in the electronic payment system
Today at 7:17 am by Rocky
» Interior Ministry: For the first time, we controlled the smuggling of petroleum derivatives by 98 pe
Today at 7:16 am by Rocky
» International companies offer offers to invest in the Dhi Qar marshes.. What distinguishes them?
Today at 7:15 am by Rocky
» “Tough” comments on interest rates raise the dollar globally
Today at 7:14 am by Rocky
» Iraq is the fifth largest oil supplier to South Korea in a month
Today at 7:12 am by Rocky
» Recovering more than 100 billion as a result of more than 200,000 employees on social welfare
Today at 7:11 am by Rocky
» The Sudanese consultant announces the completion of Baghdad Metro track designs
Today at 7:08 am by Rocky
» Al-Sudani stresses ending the problem of triple-shift schools
Today at 7:07 am by Rocky
» Iraq begins building two new tankers to transport petroleum products
Today at 7:06 am by Rocky
» Forming a council for “competition and preventing monopoly”
Today at 7:04 am by Rocky
» Features of an Iraqi-Turkish agreement regarding the status of the Kurdistan Workers’ Party
Today at 7:02 am by Rocky
» {Al-Buzrajiya} between the hammer of fraud and the power of the owners
Today at 7:01 am by Rocky
» Ministry of Oil: The gas sector is witnessing great development
Today at 6:59 am by Rocky
» An agreement with Britain in the field of securities
Today at 6:58 am by Rocky
» Discussions between Baghdad and Ankara to open a new port
Today at 6:57 am by Rocky
» Trade: About 11 million citizens updated their new card information
Today at 6:56 am by Rocky
» Electronic payment is sustainable growth
Today at 6:55 am by Rocky
» Experts: Iraq qualifies to be an important tourist country
Today at 6:54 am by Rocky
» Amending the Health Professions Law “robs” scientists of the central appointment 3 years after it wa
Today at 5:20 am by Rocky
» Is the “blessings package” that Erbil paid to the citizens of Kurdistan related to the elections?
Today at 5:19 am by Rocky
» Exceeded 5,000 projects.. Allocating 10 trillion dinars to support governorate reconstruction plans
Today at 5:18 am by Rocky
» “His need no longer exists.” Parliamentary Finance confirms the necessity of returning the retiremen
Today at 5:17 am by Rocky
» To communicate with the bases... 12 directives from Al-Sadr, including blocking numbers for non-gove
Today at 5:15 am by Rocky
» In an interview with "Baghdad Today"... an Iranian researcher reveals the importance of Haniyeh's vi
Today at 5:14 am by Rocky
» After it was 63 trillion in 2023... the 2024 budget deficit will rise to 80 trillion dinars
Today at 5:13 am by Rocky
» Parliament reveals the date of the first evaluation of the governors and determines the party respon
Today at 5:11 am by Rocky
» The President of the Republic informs Al-Araji and Al-Basri: Momentum must be mobilized to eliminate
Today at 5:10 am by Rocky
» Can the Federal Court sue others? A legal clarification of its response mechanism to abuse
Today at 5:09 am by Rocky
» Despite promises to soon stop burning gas.. What is the secret behind Iraq renewing the Iranian gas
Today at 5:07 am by Rocky
» Advisor to Al-Sudani: The dollar is on the way to further decline, and 70% of Iraqi traders have ent
Today at 5:06 am by Rocky
» Iraq exported more than 99 million barrels of oil last February
Today at 5:04 am by Rocky
» Barzani “gives good news” to Kurdistan employees: salaries, land, and loan exemptions
Today at 5:03 am by Rocky
» Alia Nassif: Nour Zuhair returned to the port of Umm Qasr to make deals.. An influential Shiite forc
Today at 5:02 am by Rocky
» The Prime Minister announces the movement of nearly 500 stalled projects
Today at 5:00 am by Rocky
» A government strategy to enhance investments.. Iraq is on the verge of a new era of economic develop
Today at 4:59 am by Rocky
» Ranging between 20% and 50%.. The Kurdistan government decides to reduce service fees, customs dutie
Today at 4:58 am by Rocky
» Al-Sudani: The reform approach in the security services is an integral part of reform in other secto
Today at 4:56 am by Rocky
» Everyone in Iraq wants the Sudanese visit to Washington to be successful, even the factions!
Today at 4:55 am by Rocky
» Sources and experts expect the agenda.. in his bag is the Baghdad dollar and the factions’ truce, bu
Today at 4:54 am by Rocky
» The decision to raise gasoline prices arouses the ire of drivers...a reminder of the large demonstra
Today at 4:53 am by Rocky
» Parliamentary services: 3 important hospitals in Baghdad will enter service at the end of the year
Today at 4:52 am by Rocky
» Iraq signs a contract to supply Iranian gas for a period of five years
Today at 4:50 am by Rocky
» Parliament adds a voting paragraph on amending the Penal Code to its agenda
Today at 4:49 am by Rocky
» His political advisor: We are not afraid of Sudanese entering the elections alone
Today at 4:48 am by Rocky
» Parliamentary services explain the reasons for the rise in real estate prices in Baghdad
Today at 4:46 am by Rocky
» Attia, criticizing the government's decisions: "The citizen's feathers will be ruffled without servi
Today at 4:45 am by Rocky
» Parliamentary Communications: Zain Iraq and Asiacell did not pay their debts
Today at 4:44 am by Rocky
» The Governor of Karbala announces the imminent establishment of the largest industrial city in the c
Today at 4:43 am by Rocky
» A government determination to end the issue of displaced persons in the middle of this year
Today at 4:42 am by Rocky
» Iraq buys gas from Kurdistan to generate electricity
Today at 4:41 am by Rocky
» Parliamentary signatures to include an amendment to the internal regulations to decide the choice of
Today at 4:40 am by Rocky
» In Basra.. a demonstration against foreign workers in Iraqi companies (video)
Today at 4:38 am by Rocky
» Al-Samarrai: Presidency of Parliament is an entitlement to the constituents, and calling it a “frame
Today at 4:36 am by Rocky
» Electronic food supplies in 6 governorates... covering 11 million Iraqis and “writing off” about 700
Today at 4:34 am by Rocky
» Corruption of the Ministry of Transport.. Representatives express their surprise at the minister’s s
Today at 4:32 am by Rocky
» The biggest supporter of the invasion of Iraq.. The death of former US Senator Joe Lieberman
Today at 4:31 am by Rocky
» Iraq is ranked “late.” A list of the most and least safe Arab countries for women
Today at 4:30 am by Rocky
» The Council of Ministers exempts the Gulf Interconnection Authority from guarantee fees: it is a gov
Yesterday at 7:48 am by Rocky
» The Iraqi government raises the size of the 2024 budget, and Parliament is “surprised”
Yesterday at 7:46 am by Rocky
» Popular Movement: We have many economic options away from American hegemony
Yesterday at 7:42 am by Rocky
» The Oil Parliament stresses the need to transfer part of the revenues to the producing governorates
Yesterday at 7:41 am by Rocky
» It will cover 14 regions in eastern Iraq.. A deputy reveals the “border electricity” project
Yesterday at 7:40 am by Rocky
» Experts Warn Mass Migration Threatens US Food Security
Yesterday at 7:37 am by Bama Diva
» Al-Fateh: America occupies Iraq through agreements
Yesterday at 7:37 am by Rocky
» Anger in Iraq over a "sudden decision"... and a reminder of a "general strike" that paralyzed the co
Yesterday at 7:34 am by Rocky
» Parliamentary Committee: Parliament is discussing today a decision that “disturbed” the Iraqis
Yesterday at 7:33 am by Rocky
» Ministry of Electricity: Our production will reach 27 thousand megawatts by May
Yesterday at 7:31 am by Rocky
» Diagnosing the “most important” problems in the oil file between Baghdad and Erbil.. What is the rel
Yesterday at 7:30 am by Rocky
» The Iraqi Fiqh Academy and the Sunni Endowment issue a fatwa to pay Zakat al-Fitr
Yesterday at 7:28 am by Rocky
» The National Bank of Iraq continues its digital transformation by launching its new banking system a
Yesterday at 7:26 am by Rocky
» Parliamentary Investment and the Central Bank are discussing the housing initiative
Yesterday at 7:25 am by Rocky
» The Prime Minister announces the restart of 500 suspended projects
Yesterday at 7:23 am by Rocky
» Al-Barti assesses the region's employees: Your salaries are insured and will be paid after resettlem
Yesterday at 7:21 am by Rocky
» Iraqi-American discussions in anticipation of the Sudanese visit
Yesterday at 7:20 am by Rocky
» Iraq and Turkey hold meetings in Ankara to discuss technical issues related to the development road
Yesterday at 7:17 am by Rocky
» A government parliamentary agreement to support budget revenues and governorate allocations for inve
Yesterday at 7:16 am by Rocky
» Oil: The gas sector is witnessing great development
Yesterday at 7:15 am by Rocky
» A Kurdish-French agreement to develop trade and economic relations
Yesterday at 7:13 am by Rocky
» Exchange companies in Mosul demand that they be entered into the currency selling window
Yesterday at 7:12 am by Rocky