Iraq’s revenues began to increase monthly, as a result of the rise in oil prices in the global market, and the increase in the amount of exports according to the agreement of the “OPEC Plus” alliance; This reflected positively on the fiscal budget for 2021.
The government planned to collect $4.38 billion in revenues from oil sales per month, but its sales exceeded $5.8 billion during the past month. Read also Former Iraqi Minister: The future of Iraq is not in oil Their thefts are estimated at about $300 billion.. Will the Iraqis accept deals with the corrupt? Half of the money is stored in homes.. Why do Iraqis refuse to put their savings in banks?
According to the latest report on actual expenditures issued by the Ministry of Finance, the government achieved a fiscal surplus of more than one billion dollars from the beginning of the year until last April, as expenditures amounted to 16.22 billion dollars, while revenues were estimated at 17.24 billion dollars.
Popular pressures on Mustafa Al-Kazemi’s government have now reduced; As a result of the increase in the amount of oil exports, Iraq is currently producing 3.930 million barrels per day, compared to the production of more than one million barrels per day since the entry into force of the “OPEC Plus” agreement on May 1, 2020.
In addition, an increase in non-oil revenues was recorded through the imposition of taxes and fees, an increase in customs tariffs, and a 20% decrease in the value of the dinar.
Benefits for the economy
The government’s advisor for financial and economic affairs, Dr. Mazhar Muhammad Salih, said that the rise in oil prices will benefit the economy during the coming period.
He said in an interview with Al-Jazeera Net that “final cash revenues will flow into the budget, and its balances will cover the deficit gap estimated at about 29 trillion dinars (20 billion dollars) in the federal general budget for the year 2021, out of the budget of the ceiling of its expenditures of approximately 130 trillion dinars (89.65 billion dollars).” .
Saleh explained that “the additional cash income will cover the planned deficit and reach the normal limits of 3% of GDP, instead of resorting to internal or external borrowing ” .
He added that this will also lead to the early implementation of “priority investment projects in proportion to the availability of funds and the transition from the allocation phase to the financing phase, instead of the delay and reluctance that occurred in previous years due to lack of funds.”
Saleh noted that the efficiency of expenditures will lead to the payment of many arrears related to the private sector, such as the entitlement of farmers, contractors, retirees and others.
The delayed projects amount to more than 6,000 projects worth 126 trillion dinars (about $89 billion), at a time when 80% of these projects have reached the completion stage, but the release of funds is an obstacle to their completion, according to the Ministry of Planning.
deficit reduction
On the other hand, the head of the Iraq Future Foundation for Economic Studies, Manar Al-Obaidi, expected that the increase in oil prices would contribute to reducing the budget deficit by 70%.
Al-Obaidi said in an interview with Al-Jazeera Net that “the problem facing Iraq currently is its inability to maximize its non-oil revenues, and this contributes to increasing the financial deficit, in addition to the failure to start implementing the financial agreement with the Kurdistan Region of Iraq, which provides for the payment of 250 thousand barrels per day to Iraqi government”.
He pointed out that “it is very difficult to invest the surplus of oil money, as the volume of internal and external debt is also high.”
And the experience of the government of former Prime Minister Haider al-Abadi has now begun to be repeated with the Al-Kazemi government, as it was able to save 15 billion dollars from the increase in oil prices, but it remained in the public treasury for years without activating the delayed projects or paying government debts.
Absence of the program
For his part, economic expert Dergham Muhammad Ali said – in an interview with Al-Jazeera Net – that “the current government lacks the real program and the will to create development on sound economic foundations, in addition to its acquiescence to political pressures that were and still impede any real growth of the private sector or any promising investment that exists.” Local development, so the Al-Kazemi government lacks planning and effective power.”
He pointed out that revenues are currently sufficient to meet budget commitments without a fiscal deficit, because it will be blocked through an increase in oil prices, and any other increase will be considered a supplementary budget.
It is noteworthy that Iraq had previously approved the 2021 budget with an estimated size of 130 trillion Iraqi dinars (89.65 billion dollars), and a deficit estimated at 19.79 billion dollars.