Dr. Haidar Hussain Al Tohme *: Reading in the Federal Financial Management Law 2019

Securities in public finance

The Tohme
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Prof. Dr. Haidarhs J *:
J
N

Read the Administration Code
Federal Finance 2019






 Commenced on Thursday 23rd of May 2019 (Federal Financial Management Law 2019)

It was published in the Iraqi newspaper Al-Waqa'eq in issue (4450) on August 5, 2019

Rules and procedures governing financial and accounting management in the field of planning, preparation and implementation

Control and audit the federal public budget and direct all federal revenues to the public treasury
To cover public expenditure and determine the linkage of the internal control units in administrative and technical terms

Mechanisms related to the implementation of budgets and the commitment of each implementing body and determine the responsibility of the Ministry of Finance at a stage

Implementation in addition to setting specific dates for submission of final accounts and compliance with budget principles (transparency)

Budget, budget comprehensiveness, budget unit, annual budget and non - allocation (when creating and executing)

The federal public budget and related matters to ensure macroeconomic stability
Financial stability, enhance the allocation of budgetary resources, improve the efficiency and effectiveness of
Optimizing cash and improving the quality of budget information provided to the House of Representatives
The audience.

 The following concerns the pros and cons of the Financial Management Law in force
Attempt to highlight the distinctions between the said law and the government program (2018-2022)
Finally, the main points were not mentioned in the new law.

Advantages

The Federal Financial Management Act of 2019 contained a large number of good items and paragraphs
Including the following:

1 - Article (6) IV that the deficit in the planning budget does not exceed (3)% of
GDP, which is an important base for curbing
Calculation of borrowing and accumulation of public debt.

Article (20): Second: The Minister of Finance is required to submit a quarterly report on reserve uses
The emergency to the House of Representatives, which is positive to tighten control and scrutiny of these amounts.

3. Article (27) (V) requires the Ministry of Finance to download the amounts resulting from non-transfer
Ministries, regions or governorates that are not organized in a region for oil and gas revenues and others
Of their annual funding.


4. The Federal Audit Bureau shall issue its report on accounts in accordance with Article 28.3
The final clauses stipulated in item (ii) of this article no later than the end of one month
June of the following year.

5. Article (37) (VII) stipulates that the account of oil and gas revenues shall be subject to scrutiny
An internationally recognized external auditor and the Federal Audit Bureau.
Government debt
Unified

6. The Federal Minister of Finance, in accordance with Article 44, shall submit a report
From the end of the fiscal year to the Council of Ministers.
(30) thirty days

7. Article (50) (1) requires all state departments to comply with the basic principles and standards of transparency
Public budget and disclosure of mechanisms for collecting and spending public funds and provide them with sufficient

Data, information, documents and reports on its past and current financial and administrative activities
In a timely and systematic manner and publish it on their websites.
Negatives

The new Financial Management Law 2019 suffered from a number of weaknesses and conflicts with the program
The most significant shortcomings of the new law are:

1. The new law, the Ministry of Finance and Planning, and the Central Bank are required to attach a number of indicators
Macroeconomic, financial and monetary with the draft general budget law for information
And auditing before approving the budget. At the same time, it provides an integrated picture of the scene

However, it will necessarily disrupt budget approval within timings and increase
The intensity of conflicts and disputes over the proposed budget items.

2. Reducing the percentage of the emergency reserve to (3)% instead of (5)% in Article 8 //
Second, paragraph (d) due to the large allocation relative to Iraq's regular budgets.

Article (13) Third: The final financial statements for the previous year shall be adopted as the basis for the statements
Fiscal year for which the federal budget is not approved and submitted to the House of Representatives for approval.

Here are the following notes:

 Paragraphs should be developed to ensure the approval of the general budget without delay and delays its commitment
Open the loopholes that allow the parliament not to approve the budget at all,
Especially since the political situation in the country may affect the mood of Parliament in rejection
Or accept the budget for reasons that may not be objective.

السابقة Previous budget data for the next year cannot be approved under any consideration, given
For the privacy of public expenditures and revenues, considering that the federal public budget
It is highly volatile and its trends cannot be guaranteed
The regional and global situation of energy markets foreshadows paths
Alarming in terms of prices and export outlets.

4. Article (19) (II) refers to the use of surpluses in the budgets of a sovereign fund.
Question: Does Iraq have a sovereign fund and is it a settled fund or investment or generations?


5) Article (25) secondly specifies the percentage of transfer b
Ratio to (5)% more.

6. Article (46) (IV) gives authority to the Minister of Finance, the competent minister and the supreme president
The entity not affiliated with the Ministry shall write off the lost, damaged and damaged assets for any reason
The validity of each of them is determined by instructions
Issued by the Prime Minister, and here are the following observations:

حية The cancellation must be valid for unintentional and not deliberate acts.

 The write-off of lost assets must be determined by a ceiling for the power of the Minister and a ceiling
In addition, the approval of the Council of Ministers is required
Deputies.

عبارة Add “other than negligence and willfulness”

7. Article (37) (IV) permits the investment of surplus oil and gas revenues account in assets
Credible foreign finances. Here, the investment is preferably by the central bank instead
From the Ministry of Finance being a state bank and runs its financial business.
In accordance with Article (40) (a) of the region and the province that is not organized in a region after the approval of a minister

Finance Get local loans. This article may provide an opportunity for the region and governorates
Expansion of lending without repayment guarantees, which raises financial problems around the repayer
As it is now with the Kurdistan Region. So preferably loans (above
Specific ceiling (subject to approval by Cabinet and House of Representatives.


9. Article (55) stipulates the abolition of the Financial Management Law and the public debt issued pursuant to an order
Coalition Provisional Authority (dissolved) No. (95) for the year 2004, with the exception of Appendix B
Of the Public Debt Law attached thereto. This means that the Public Debt Law is enforced
Several observations are made here:

قانون The Public Debt Management Law suffers from several technical problems and needs to be amended.
جديد There is no justification for adopting a new financial management law without a government debt law
Although the latter is part of the former.

اله The fragile financial situation and the accumulated debts need to review the structure and content
Effective Debt Management Law.

The Financial Management Law
Government Program 2018-2022)

1 - Article 53 - granted the Minister of Finance to choose any type of developed budgets to suit
With the requirements of the stage and provide the necessary possibilities. While the government program is required to
The 2020 budget shall be the budget of programs and performance as stated in the fourth axis, "Awwal", paragraph 1
In the government program.

2. The new program commits the federal government, specifically the Ministry of Finance, to start adopting a management system
Government Financial Information
This is not mentioned in the new Financial Management Law.


(3) The fourth axis, paragraph (9) in the government program, stipulates that domestic debt shall be monitored
And outer. This paragraph is one of the most important paragraphs of the fourth axis Awal // because of its repercussions on
The economic and financial situation in Iraq in the medium and long term.

)) Monitor internal and external debt and prevent it from exceeding certain levels and linking
Internal and external debt of investment projects and generating values ​​and wealth
Used primarily for consumption or budgetary operational purposes).
However, the new Financial Management Law did not refer to it.

4 - The electronic collection material has not been added to the new financial management law as it keeps pace
Article 16: Modern technology and development, approved in the 2019 budget
( Second
And the Council of Ministers Resolution No. 378 of 2018, which includes the draft collection and payment
E-government and e-government.

5. The new Financial Management Law did not mention the need to settle the final accounts for the years
Past and within specific time bound and binding, which is promised by the government program
(2022-2018)

What the new law missed

1. Determine the financial frameworks and rules governing the course of public expenditure within the criteria of efficiency, effectiveness and achievement
Financial sustainability.

2. Fiscal policy efforts in Iraq should be concentrated in the search for maximized resource opportunities
Non-oil which clearly missed the law.


3 - surpluses realized due to poor implementation of the investment budget must be transferred to the budget
Investment for the next year (exclusively).


4. The Iraqi oil economy requires the establishment of a sovereign fund to isolate the public budget
Macroeconomic and volatile global oil prices, in order to achieve stability at the level
Economic and financial rights and the preservation of the rights of future generations, as well as being an important

Priority projects in order to achieve success in the development process
Economic development.

5. Establishing the Iraqi Sovereign Debt Amortization Fund, which shall be financed mainly from the financial abundance realized
C) The difference between the oil price fixed in the budget and the current market price.

(*) Assistant Professor at the College of Business and Economics at Karbala University
Copyright Iraqi Network of Economists. Republishing is allowed on condition
Reference to the source. October 6, 2019

http://iraqieconomists.net/



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