Dr. Muhammad Salih * appearance: features of the federal budget for Iraq 2020 and actual disability conflicts.

Securities in fiscal policy








Dr. Mazhar Muhammad Salih *: Features of the general budget
Federation of Iraq 2020 and actual disability conflicts.

The 2019 fiscal year for Iraq has passed and a default deficit of about 27 trillion dinars was
That deficit constitutes an estimated 20% of the total aggregate spending of 127 trillion
JD. It was covered without at least foreign borrowing or borrowing when the financing came
The rentier is from two sources, the first of which is a rounded surplus from the 2018 budget with a balance that has not decreased

About 17 trillion dinars and the second, of the high average Iraqi oil prices
It was estimated at $ 64 a barrel throughout 2019 compared to the price of a barrel of oil
The 2019 budget of $ 56 a barrel, with export capacity, was around 88.3 million
Barrels of oil per day. Considering that the list of wages and salaries that
The 2018 budget exceeds 57% of total government spending, may rise in the 2020 budget
To 67% of the total current government spending, due to appointments that added nearly half
One million new government employees. It is noted that during these two positive financial sources ended

Fiscal year 2019 is in a state of near balance and without real deficit, but it is
It was free of any added financial hedges that could only feed the 2020 budget deficit
With an opening balance, it may reach up to 3 trillion dinars. Thus, the estimated deficit will increase or
(Default) deficit in the budget for the year 2020 to nearly 50 trillion dinars, and it represents these
This time around 30% of total spending in the said budget compared to the default deficit
Same in the 2019 budget, which at that time was estimated at 20% of total government spending
Thus, the deficit-to-GDP ratio in the 2020 budget will be a ratio between
7-8% compared to the international benchmark of more than 3. 3%
Accordingly, there is an expectation that the (default) deficit of 50 trillion dinars will turn into
The budget for the year 2020 indicates a deficit (real) that requires financing it through borrowed debt and an amount

It is less than its amount for the fiscal year 2019 surpluses, which amounted to about 17 trillion dinars
As a minimum, as mentioned previously. Global studies and survey centers estimate
Global Fitch in its latest report on its analysis of the risks surrounding the economy
Iraqi to two basic things, one of which is the low average price of a barrel of Iraqi oil
The source amounted to approximately $ 62 during the fiscal year 2020 compared to its average price
Actually $ 64 in the 2019 budget (which will reduce the betting oil revenue

When designing the aforementioned default deficit, the other thing is that Iraq must
He broke his pledges to commit to a specific production ceiling and according to the recent OPEC agreement, to increase his production

Daily to five million barrels of crude oil per day, with an increase of half a million barrels, which
It helps to increase its export capacity to compensate for the decrease in public budget resources.
In spite of the high budget expenditures currently according to the foundations, they are still relatively optimistic, based on a condition

If the oil revenues are sufficient, then the budget project will be reviewed
Currently it will remain a condition necessary and necessary. There are concerns surrounding it
In the future of energy markets towards a decline in global oil demand and the availability of indicators



About

Almost stagnation in the global economy if the price of a barrel of Iraqi exported oil is currently sold
$ 49 per barrel, which is lower than the price specified in the 2020 budget of $ 56 per barrel
Also early March. At a time when the economic report issued by the International Finance Institute
It is 1 percent
2020, global GDP is likely to grow
in a year
Almost 2020. And this potential reading is less than last year's estimates
6.2 percent, and would be the weakest since the global financial crisis in 2008.


This necessitates extreme caution towards reviewing the budget structure radically and avoids
The country resorting to risk financing with a deficit to support the operational budget
Through borrowing, external borrowing, or resorting to more flexible internal borrowing
As the financial indicators of debt sustainability continue to confirm that the debt-to-GDP ratio is high
The total is around 56-55. % And what we call for is not a call for austerity, but there is an invitation
The habit of Iraqi public financial engineering and sparing the public budget problems equivalent to the so-called
With constraints budget soft spending is now in place
Easily by expanding government advances, overdraft and borrowing with the hope of collection
Fast potential government revenue is all from government good habits, and helps
Inevitably, the accumulation of indebtedness and the expansion of the deficit in public revenues loses the consolidation issue
The financial consolidation fiscal has its basic manifestations such as reducing the deficit gap in
Public revenues or reducing the amount of accumulation in public debt. All of them lose the country's financial structure
Constituents of sustainability to achieve stable macroeconomic and social goals.
Finally, the approval of the federal budget for Iraq for the year 2020 on the availability of a government will depend
It has the ability to pass bills to the House of Representatives according to the constitutional process, as
Approved official applications allow the caretaker government to pass bills
And submitted to the House of Representatives to legislate that failure activities of the Council of Ministers in a government
Conducting business on the practice of routine executive matters established under laws and regulations

And the instructions in force. It is not an option before the financial authority today to adopt the principles set
It is required by the Federal Financial Management Law to spend 1/12 per month of the total
Actual expenditures in the 2019 budget, if the expenditure in this case will cover expenses
The government's operational activities, in particular salaries, wages, pensions and allocations
Social welfare and provision for external and internal debt service and reimbursement of expenses
Only ongoing investment projects.

And if the fiscal year ends until December 31, 2020 without adopting a general budget
Federal, this means that the country will be denied any new government investment projects except for
Those that are under construction, which means maximizing the slowdown in economic growth and the availability of energies
Investment financing is less to counter the growth of the workforce added to the labor market in the year 2020
Which is estimated at less than 400,000 added jobs annually, which may fuel a recession
In economic growth
Relatively speaking, the unemployment rate will exceed 18% of the total workforce
At the same time, discouraging signals to private sector investors, due to the fact that the budget
Economic and social indicators
Targets
It is a one-year financial plan that includes express or implied
Mission . Thus, failure to approve the budget will mean, over time, the absence of investor knowledge and the rest
Market makers are the nature of a country's economic and social goals that enable them to make decisions
Positive to push business further.

(*) Researcher, academic economist, and advisor to the Iraqi government on fiscal and monetary policy
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