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Budget 2021 ... a move to add `` huge '' revenues DinarDailyUpdates?bg=330099&fg=FFFFFF&anim=1

Budget 2021 ... a move to add `` huge '' revenues

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Budget 2021 ... a move to add `` huge '' revenues Empty Budget 2021 ... a move to add `` huge '' revenues

Post by claud39 Tue Jan 26, 2021 5:01 pm

Budget 2021 ... a move to add `` huge '' revenues


2021/01/26


Budget 2021 ... a move to add `` huge '' revenues 146184


Baghdad today - Baghdad



Iraqi officials are talking about a huge financial deficit in the 2021 budget, ranging from 71 to 80 trillion dinars (65 billion dollars), which is the highest in the country's history, according to observers, at a time when Finance Minister Ali Allawi revealed yesterday negotiations with the International Monetary Fund with the aim of Obtaining a loan of 6 billion dollars, and saving the economy of Iraq mired in problems.



Historical impotence 

A member of the Parliamentary Finance Committee, Jamal Cougar, said, "The Finance Committee continues to consider the project in order to prepare it with an amended version and submit it to vote in the House of Representatives."

And on the expected amendments, Cougar said that "the blocks seek to reduce budget expenditures from 164 trillion dinars to 120 or 135 trillion dinars, and if that happens, it will reduce the size of the financial deficit." He continued, in a press statement, that "the Finance Committee is also working to add 20 trillion dinars to revenues, by raising the price of oil exported to Iraqi refineries to support coverage of domestic consumption of one million barrels, one of which is currently sold at a symbolic price of $ 5."



According to the draft budget, expenditures amount to 164 trillion dinars (112 billion dollars), with a fiscal deficit of 71 trillion (48 billion dollars), which observers count as a historical deficit in the oil-exporting countries.

 The First Deputy Speaker, Hassan Karim Al-Kaabi, had confirmed that "Parliament is working to provide financial allocations for employee salaries, contracts, employees and free lecturers," indicating that "Parliament is working to reduce spending and reduce the deficit before voting" soon "on the draft Federal Budget Law 2021.


In an interview with the semi-official Al-Sabah newspaper, Al-Kaabi said: “The House of Representatives will take into account the basic principles in the budget, which are reducing the volume of expenditure of 164 trillion dinars and reducing the 44% deficit by 71 trillion dinars from the total estimated budget of 93 trillion dinars, which It is set based on the price of oil at $ 42 per barrel.


Economists believe that Iraq's resorting to devaluation in order to bridge the public budget deficit due to the increase in expenditures does not achieve the goal at the required level, as the real sectors, industry, manufacturing industries, agriculture and services are at their lowest levels, and their contribution to the GDP is low.


Iraq's non-oil exports are very few, and do not constitute any percentage in the trade balance, and the private sector is also inactive, and the advancement of these sectors will take many years with the presence of effective plans and policies, and the value of the local currency is usually devalued in countries that have high export capabilities. The customs policy is ineffective at the present time, and it represents the basis for protecting the local product to stimulate production.


Parliamentary promises to intervene 


The Parliamentary Finance Committee confirmed that the size of the budget deficit will not remain 71 trillion dinars, indicating that it is serious about making changes to the budget in line with the current situation of the country.



The reporter of the committee, MP Ahmed Al-Saffar, said in a press statement that "public spending in the budget will witness a clear reduction," noting that "the committee has identified clear pockets and points in the budget that will enable the government to maximize revenues."


Al-Saffar added that "the size of the budget deficit will be reduced and will not remain 71 trillion dinars, and that the change will extend to even the price of oil according to which the budget was calculated," indicating that "the committee is serious about making changes to the budget in line with the current situation of the country, and to achieve the best use or exploitation For public revenues. "


He continued, "There are some points of contention and some points that need to be repeated hosting because the committee needs to know some spending units and needs more information so that the committee can accurately determine the amounts that these units need," noting that "the committee does not need more than ten days." Or two weeks to reach a final budget study. "



Questions are still being raised about the financial and economic indicators of Iraq in the coming year, especially with the continuing indicators of low oil prices and the high indebtedness of the country, and the decline in reserves in the central bank, which may affect the local currency rates significantly, and these problems prompted the Iraqi .government to resort to borrowing in more From time, to pay employee salaries and other operating expenses


White paper


The projected estimates of the size of the deficit in the draft budget raise a great economic controversy. Specialists believe it is necessary to reduce spending and adopt austerity formulas in managing financial resources, given the pessimistic financial indicators for the next year as well.

And economics professor Abdul Rahman Al-Mashhadani points out that the speech of parliamentarians about a large deficit in the 2021 budget gives the impression that "the government depends on the estimates of the White Paper in preparing the draft budget, which was estimated at 153 trillion dinars (about 130 billion dollars)," indicating That, "If this number is adopted, the amount of the deficit will exceed the limits of 72 trillion dinars (about 60 billion dollars), and this is a huge number."



Al-Mashhadani asserts, in press statements, that "reasonable numbers" to be included in the draft budget should "not exceed the limits of 63 billion dollars," adding, "According to available economic data, the oil revenues of Iraq for the next year will reach about 42 billion dollars, and non-oil. About $ 8.5 billion, which leads to a deficit that does not exceed $ 12.5 billion, and this is logical and not worrisome. "


He pointed out that "the solutions available to the government are related to" rationalizing spending and setting the budget within reasonable limits, "pointing out that" Iraq at best did not achieve spending higher than 85 trillion dinars (about $ 71 billion), except for the year 2013, when the volume of spending reached About 100 trillion dinars (84 billion dollars) were suspicious of corruption. "

He said, "All indications indicate that the current year will be difficult financially, after Iraq drained its capabilities last year, as the central bank's reserves decreased to 54 trillion dinars (about $ 45 billion) from 67 trillion dinars (56 billion dollars)." The accumulation of domestic debt, and oil price indices will remain between 40 and 50 dollars a barrel.


Save the economy




Yesterday, Finance Minister Ali Allawi confirmed that Iraq is negotiating with the International Monetary Fund with the aim of obtaining a $ 6 billion loan to save its mired economy, while he gave positive indications regarding the 2021 budget deficit and linking it to high oil prices.


 "Once the Iraqi parliament approves the spending plan for 2021, the government will be able to request rapid financing of $ 2 billion from the emergency financing mechanism created by the International Monetary Fund for the benefit of countries affected by the repercussions of the Corona virus," Bloomberg reported, Ali Allawi. Allawi said, "Iraq can then request a second, low-cost loan of $ 4 million from the International Monetary Fund's government reform program."





The US agency stated that financing the International Monetary Fund would cover a small part of the expected deficit in the budget, but it would "reduce the severity of the depletion of Iraq's foreign exchange reserves." Last year, the Iraqi government had to borrow more than $ 25 billion from the central bank in order to pay the salaries of public sector employees and meet other financial requirements.




 "Bloomberg" pointed out that the Iraqi government also plans to rely on other financing tools to help cover the deficit. Allawi said that once the budget is approved, the government will also move to issue domestic bonds worth $ 5 billion.





As for international bonds, the Iraqi Minister of Finance said that "international loans are somewhat expensive," adding: "I do not know if there is a desire to buy Iraqi bonds. Returning to these markets now remains difficult." "Bloomberg" said that the average yield of Iraq's dollar bonds is 8.3%, adding that it is among the highest levels of any government in the world, according to Bloomberg Barclays indicators.




 Iraq's economy has been suffering since the collapse of global oil prices due to the Coronavirus pandemic. Although oil prices have recovered during the recent period, Iraq is still struggling to cover its costs and avoid the exacerbation of the fiscal deficit.





And last year, Iraq exceeded production limits agreed upon with other oil exporters in the "OPEC +" group, in order to collect the liquidity its economy needs.


However, Iraq is committed to compensating for the excess production during the past months, according to the Iraqi Finance Minister, who assured Bloomberg that "Iraq will respect the quota set for oil production within the OPEC + coalition" because it helps reduce the risk of price collapse. "




Allawi praised Saudi Arabia's sudden production cut by one million barrels this month, which helped oil prices rise. Allawi said, "Iraq's budget deficit may shrink by 25% this year if oil prices remain around their current levels of $ 55 a barrel."





The International Monetary Fund expects the Iraqi economy to contract by 12% in 2020 - the highest rate among OPEC countries, and have experienced a budget deficit of 22% of GDP.





Iraq devalued its currency last year by the largest amount ever, to reduce pressure on public finances at a time when it is trying to secure billions of dollars in foreign aid.





https://baghdadtoday.news/ar/news/143662/A
claud39
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