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Iraq wishes to borrow abroad to provide salaries for employees
The Economy News - Baghdad
Officials and lawmakers said that Iraq would have to suspend most development, energy and borrowing projects from abroad in order to be able to pay the salaries of state employees and finance food imports in the event of continued collapse in oil prices .
They said that the OPEC member, who depends on crude revenues for 95 percent of his income, will have no choice but to cut spending due to the spread of the Coruna virus and the collapse of the oil production agreement between OPEC and its allies .
Such a move would likely stoke further opposition as Iraqis protest for months against ruling elites who accuse them of denying basic services such as electricity supplies or decent hospitals despite the country's oil wealth .
The crisis is ravaging Iraq, at a time when it lacks leadership after the resignation of Prime Minister Adel Abdul Mahdi late last year over the backdrop of protests, while divided lawmakers are unable to agree on who replaces him. The outbreak of the Corona Virus extends from neighboring Iran, and is its focus in the region .
Because of internal problems, parliament fails to agree on the draft 2020 budget, which in any case has long been presumed to have assumed an oil price of $ 56 a barrel, roughly twice the current level .
Mazhar Salih, the economic advisor in the Prime Minister’s Office, said, “The proposed budget for 2020, which is about 165 trillion Iraqi dinars, originally expects a deficit of more than 50 trillion Iraqi dinars at a price of 56 dollars per barrel .”
"The collapse in oil prices ... means that the deficit will double, and that the only option left for Iraq is to resort to international creditors, " he added.
Haitham al-Jubouri, head of the House Finance Committee, said borrowing from abroad would be the only way to avert a major financial crisis .
And Iraq will have to postpone important projects in the energy sector such as a huge agreement in the south that is to develop oil fields, increase storage capacity, transportation, export infrastructure and build units to process secondary gas products .
Projects to support the electricity supply and revive the industrial sector in Iraq are also at risk, a plan that has been underway since the security situation improved relatively after the defeat of ISIS in northern Iraq in 2017 .
Iraq used to be a large producer of dates and agricultural products, but now it imports most of its needs .
Two officials at the Ministry of Trade at the site responsible for importing basic foodstuffs said that Iraq has enough rice and wheat and can compensate the deficit with domestic production .
However, the Ministry is finding it difficult to import fortified basic foods such as edible oil, sugar and lentils, which are distributed through ration cards .
"We already have a deficit in the financial allocations sufficient to buy food ... Simply we do not have the money and the government has to find a solution or we will face complex problems, " said an official, who declined to be named .
Earlier this month, sources at the Ministry of Commerce told Reuters that the delay in the budget also impeded the signing of new contracts to buy grain .
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