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Budget deficit between the problem and the solution
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Budget deficit between the problem and the solution
https://annabaa.org/arabic/economicarticles/17600
Budget deficit between the problem and the solution
Saturday 16 December 2018
Budget deficit between the problem and the solution
Saturday 16 December 2018
Despite the multiple differences in the budgets of the government each year, there is something agreed and did not differ most of these budgets since 2003 to this day, the fiscal deficit in the balance sheet, where the deficit is one of the largest muscles in the way of economic and financial growth in Iraq, Moreover, some of the measures taken by the state have not only increased the problem. This may be due to several reasons, including the lack of treatment methods and the inflating of state responsibilities, which in turn reflected the rise in public expenditure as the level of government imports declined. Production sectors.
The budget deficit can be defined as the situation or situation in which the government's public expenditure exceeds the expected public revenues during a specified period, usually one year. This problem is one of the most important economic problems for many countries. It is not only for developing or poor countries, it can threaten Even the most powerful and advanced economies, there are many countries that have suffered and continue to suffer from this issue, such as Iraq, Egypt, Greece, Italy, Argentina and even the United States if we consider the rise in public debt ratios.
And that the follower of the Iraqi economic file and in particular the file of public budgets notes that the deficit has accompanied budgets in all previous years and to the extent that it became the axioms of the fiscal policy of successive governments, and when the draft budget in 2019 may draw the reader's attention to the increase in the size of the planned deficit, In the budget of 2018 (although the Ministry of Finance confirmed, on September 27, 2018, the deficit budget amounted to 19 trillion dinars) we find that this figure has increased in the estimates for the next fiscal year to reach 22.8 trillion despite the high prices Oil globally which represents a high estimate The average price of a barrel of oil, which was estimated at $ 56 after it was $ 46 in 2018, an increase of $ 10 per barrel with a steady export rate of 3.8 million barrels per day, and could represent an increase in the actual volume of oil revenues of the state.
The increase in the price of a barrel of oil can eliminate any deficit, or at least maintain the deficit in the previous rates, but nevertheless noted the size of the deficit planned from 12 to 22 trillion or fluctuation rate from year to year and in this paradox must be reader and follower if asked For the reasons and justifications of this deficit?
In order to answer this question it is necessary to mention the difficulty of returning the deficit phenomenon in the budget to only one reason, because it is a complex phenomenon whose causes are due to many factors and causes, including:
• Not keeping pace with resources and public revenues for growth in public expenditure.
• Increasing public spending and diversification.
• The proportion of current expenditures in public budgets to total public expenditure.
• Absence of the policy of rationalization of public expenditure and weak efficiency.
• The spread of cases of financial and administrative corruption within government institutions and the accompanying waste of public funds, which led to the loss of a lot of public spending.
It should also be noted that the deficit in government budgets since 2003 until the 2019 estimates is a planned deficit (except for 2016, where the deficit was planned to real deficit due to the decline in oil prices), where the deficit is defined as a series of actions by the government when exposed The economy to a recession caused by the deterioration in the volume of aggregate demand, which drives the government to increase spending and reduce taxes, and in the case of Iraq, the deficit planned justification far from dealing with the crisis of recession, but is to avoid the fluctuations in oil prices and the possibility of falling prices, To a real deficit, as happened in 2014 as the government relies on oil export revenues to finance the general budget funds for the crisis of government spending and by up to 90% of the value of the budget crisis, in 2019, it amounted to estimates of oil revenues 93.7 trillion out of 105,
This fiscal policy in order to guard against fluctuations in oil prices and its effects on public budgets clearly shows the failure of successive governments to build the rest of the productive sectors in the country and to be satisfied with them and they collapse and disappear because of government negligence, so that the oil sector is unique in financing the central treasury if prices are shaken The country is in a stifling crisis that may threaten the financial and economic construction of the country while the Iraqi government has failed to deal with it or at least put the country on the path of resolution and treatment. Instead, adopted a planned deficit policy that keeps Iraq within this The first is borrowing to cover and cover government spending, which in many respects is a commitment that is difficult to abandon. The second is to signify the deficit in the state in case of inflation, because it is forced To issue additional amounts of money or devaluation of the currency (Dinar against the dollar) in an attempt to address the deficit without resorting to borrowing, the result is devaluation of the currency and the occurrence of inflation. This is an inevitable result of the continuation of the deficit and its continuation from one year to the next. It must reach this end no matter how long it takes if no solutions are found to get out of this crisis.
It is clear that addressing the treatment of the deficit in the state budget is necessary and crucial and is a top priority because of its close relationship with the explosion of the forces of inflation and the crisis of external indebtedness and its treatment is one of the core issues that tops any serious government program to combat economic and social crises. The following points:
• Emphasis on the productivity of public expenditure and that the maintenance of public expenditure is a general need, not especially that spending is for a real development objective and not expenditure for spending only.
• Reordering public spending priorities to calculate the investment side and reduce current hypocrisy as much as possible by avoiding wasteful spending and fighting the burning policy of the budget.
• Reviving the productive sectors that have been stalled for quite a while, as they can achieve increased production, labor force and thus an increase in government imports.
• Work to increase production capacity and raise the quantity of oil source in addition to serious and real work on the full investment of national wealth through the investment and export of natural gas and associated gas.
• Work on increasing non-oil imports by working on an effective tax system capable of collecting taxes and fees, while providing community services to raise the tax awareness of the citizen and feel the usefulness of the amounts paid in exchange for the necessary services.
• Striking power and effectiveness on the heads of financial and administrative corruption and its tails, which tampering with the government system and emptied of its content and the restoration of the state watchdog.
* Economic Researcher
claud39- Elite Member
- Posts : 18423
Join date : 2018-11-04
Dinar Daily :: DINAR/IRAQ -- NEWS -- GURUS and DISCUSSIONS :: IRAQ and DINAR -- ARTICLE BASED INFORMATION and DISCUSSIONS
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