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Friday, December 8, 2023
EconomyIs the new Iraqi budget a serious start to development?

Is the new Iraqi budget a serious start to development?

On Monday, Iraq’s parliament approved the country’s 2023 budget of 198.9 trillion dinars ($153 billion), which includes record spending on a growing government wage bill, development projects aimed at to improve services and rebuild infrastructure destroyed by neglect and war, According to the report, Iraqi media reported that Iraq’s budget deficit had reached a record high of 64.36 trillion dinars.

Iraq’s budget projected that oil would be traded in 2023 at $70 a barrel, and it expected Iraq to export 3.5 million barrels a day, of which 400,000 barrels came from the Kurdistan region.

Article 14 of the budget, which is related to the share of the budget of the Kurdistan region, has caused disputes between the parliamentary blocs, because this article concerns the oil revenues in the Kurdistan region and its audit by the Federal Bureau of ‘audit.

A large budget deficit

International Economic and Energy Advisor Amer Al-Shobaki confirms in his interview with “Sky News Arabia Economy” that the new Iraqi budget includes basic improvements in infrastructure and social development in the country, but at the same time, he sees “that this budget has resulted in Iraq’s deficit, which is the largest of its kind in many years, which doubles the government’s debt and adds more burdens to debt service, in terms of interest and payments on future budgets, and the deficit is estimated to be almost twice the deficit of the previous budget, or about 25% of the total size of the budget, to reach about $40 billion.

Al-Shobaki explains: “The budget deficit stems mainly from additional spending on salaries and wages for the public sector, and it is likely that the government will create around 500,000 jobs in the public sector, which will expand its obligations to pay salaries and wages. will add new burdens to him, considering that a weak budget which adopted the exchange rate. deficit, and the Iraqi government should instead have to deplete the budget by paying the salaries of public sector employees, supporting greater private sector participation in development, and easing the burden on the budget.

The development begins with projects related to infrastructure, including the electricity network, including electricity interconnection projects with the countries of the Gulf Cooperation Council, where 220 million dollars have been allocated for this connection with a capacity of 500 megawatts , and there is a connection with Jordan at a cost of 140 million dollars, which makes it possible to supply electricity to a greater number of citizens, according to Shobaki.

Baghdad and Kurdistan conflict

Regarding the resolution of the dispute between the Iraqi government and Kurdistan, the international economic and energy adviser, Al-Shobaki, adds: “After the Court of Economic Disputes in Paris approved the agreement which obliged Turkey to stop oil exports from Kurdistan, it has been agreed with the Iraqi government to place the revenues from the sale of oil from Kurdistan in the central bank in Baghdad.” , for the federal government to supervise the expenditure of this amount for the autonomous region , but so far Turkey has not allowed the restoration of exports through the port of Ceyhan, as Turkey was asked last May to resume oil exports through the central government, so that the revenues are placed with the central government Exports are expected to resume at the end of June.

In turn, the economist, Hussein Al-Qamzi, said in his interview with the Sky News Arabia Economy website, “The budget explains in detail how the government will spend money on salaries of public employees and improving infrastructure and services It is a huge budget and the budget deficit is estimated at 64.36 trillion dinars, which means that the government will spend more than it has, and this will double the deficit of last year, and the government expects oil revenues to be significant, but there is no alternative plan if oil prices fall, and that is very likely given the availability of Russian oil cheap in the market, only there is an assumption based on One component is an increase in oil prices, but if prices fall, Iraq may need to borrow more money to maintain spending.

Al-Qamzi describes the increase in the number of employees, according to the budget, of more than half a million new employees in the public sector, as a disaster, noting that “Iraq already suffers from a glut in because of the number of current employees employed in the public sector, because the salaries and benefits of these additional workers will exceed $58 billion, thus inflating the wage bill. The public deficit and the financial pressure will increase, and Iraq does nothing to reduce its dependence on oil. ”

The end of the dispute between the Iraqi government and Kurdistan over oil gave Baghdad additional authority over Kurdistan’s oil revenues, depositing it in a bank account belonging to the federal government, then paying it the Kurdistan government’s share. , but oil exports from Kurdistan have not resumed at Turkish ports so far, despite Iraq asking Turkey to do so last May, according to Al-Qamzi, an economist.

Job Opportunities and Unemployment

Economist Ali Hamoudi said in his statement to the “Sky News Arabia Economy” website, “This budget is the largest in the country’s history, and there is hope among the Iraqi people that the budget targets to create tens of thousands of public employment opportunities.As a country that has suffered from decades of war and sectarian strife following the US military invasion in 2003, you want to improve services and rebuild war-damaged facilities.

“Iraq has one of the fastest growing populations in the world, and it is expected to double from 43 million to around 80 million by 2050, when most of the economy is state-run. , with high unemployment as the country witnesses frequent protests over the lack of jobs and public services,” Hamoudi adds.

For his part, economist and member of the board of directors of the Center for Middle East Economic Studies, Hashim Akl, notes that the main problem facing the budget is the lack of infrastructure, and the neglect of it. develop and improve them, in particular electricity, Iraq suffering from an electricity deficit estimated at 50% of real needs, which has given rise to electricity interconnection projects with Jordan, Turkey and the joint line of Gulf, in addition to another problem, that of burning gas linked to oil production, forcing Iraq to import gas from Iran, and this is another burden on the budget, because imports reach $4 billion.

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Arab Desk
Arab Desk
The Eastern Herald’s Arab Desk validates the stories published under this byline. That includes editorials, news stories, letters to the editor, and multimedia features on easternherald.com.

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