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Iraqi Spending Disease

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Iraqi Spending Disease Empty Iraqi Spending Disease

Post by claud39 on Thu Jun 20, 2019 7:56 am

Iraqi Spending Disease




20/06/2019





Iraqi Spending Disease 14951







The period after the change of the former regime, after 2003, is a major shift in household and government expenditure. The proportion of consumer spending has increased significantly in the area of ​​investment spending. In this article we will show what we mean by consumer spending and investment 
spending and how to deal with undesirable effects. Of spending in general, as in the following two axes: The first axis: government spending

It is divided into two parts:

Government spending is the expenditure on which governments seek financial, economic or social returns. Governments may buy foreign or local government bonds for long-term profit, or the government will spend on infrastructure development to facilitate the work of the industrial sector Or the government may spend on developing the health or education sector to achieve social return. This expenditure is positive investment by governments and is of public interest and is included in the duties of government spending.

B) Government consumption expenditure: This expenditure, which does not achieve any of the financial, economic or social returns, but is spent to ensure the continuation of the dynamics of government work such as salaries of employees, purchase of machinery and equipment used in government departments, and even fuel used in government vehicles. The scope of government consumption expenditure, which is considered as non-developmental operational excellence.

The second axis: Family spending

Family spending is the cornerstone of the development and development of each country. It leads the way of the production and trade process, which in turn accelerates or slows the development of the country. As in government expenditure, family spending is divided into two parts:

A: Household investment expenditure: This is the portion of household income that directs a new income or increases the financial return of the spent family, in the sense that individuals spend for monthly or annual profits such as spending on developing their industrial projects or entering the financial markets. This spending is beneficial to individuals who are spent in particular and to society in general (investment is beneficial to non-investors even if not intended).

B) Household consumption expenditure: This is the expenditure of the household sector or individuals to ensure the sustainability of their lives, such as spending on housing, food and clothing. This expenditure is non-investment, which does not entail any financial or economic return and is of immediate benefit.

After we listed the concept of spending and its interlocutors and sections, we can determine where the imbalance in the Iraqi public spending. If we go back to the mentioned branches, we find that the largest proportion of spending is located on the consumer side without investment and in both the government and domestic sectors. Or more than 70% of government spending, and this large percentage adversely affect the mentioned financial, economic or social revenue from government spending, most of the government expenditure is in the form of salaries and wages of state employees.

Household consumption expenditure may exceed 70% of the total household expenditure. If we follow the flow of household expenditure, we find that it is directed toward luxury goods more than consumer goods, and both do not achieve future income for the spenders. The Iraqi individual spends most of his income on mobile phones, Luxury goods that do not fall within the scope of the need, and its mandate was manufactured locally, but most of them are mostly imported from abroad.

This is the disease of Iraqi spending, which mourns the Iraqi government and family income and destroys the future of Iraq's economic development. Therefore, a strategic plan must be drawn up to deal with this disease or reduce its symptoms in the society. We begin to reduce government consumption expenditure and increase investment spending by 40-50% Of the total government spending. The start of infrastructure is favored as an important stage that will facilitate the second phase, which should aim to increase the family investment expenditure to higher rates than currently exist. Household consumer spending may become more necessary and necessary. This is done by imposing restrictions and customs duties on these commodities without any future benefit, and encouraging individuals to invest a percentage of their income in order to achieve future returns such as deposits in banks or the desire to open industrial projects even if they are small in size.

*Economic Researcher
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