Economists expect Iraqi oil imports to increase by 16 billion dollars without the end of the financial crisis

Time: 05/11/2021 17:32:25
 
{Economic: Al Furat News} Economists expected an increase in the state's imports of crude oil sales during the fiscal year of 2021, amounting to about $ 16 billion, with the continued rise in crude prices in global markets.

The text of the statement by the Iraqi Economists Network said: "Through our follow-up of international oil prices since the beginning of this year, we have noticed a significant increase from the annual rate adopted in the Federal Budget Law for 2021, at $ 45 a barrel.

The lawmakers had expected to collect revenues from exporting crude oil at about 81 trillion dinars, based on an annual export rate of 3,250 million barrels per day and an exchange rate of 1,450 dinars to one dollar.

However, the amount of oil revenues that were mentioned in the budget law published in the Iraqi newspaper Al-Waqa'yat includes an arithmetic error, as it should be 77.4 trillion dinars, equivalent to 53.4 billion dollars (3,250 million barrels x 45 dollars x 365 days = 53.4 billion One dollar x 1450 = 77.4 trillion dinars) instead of 81 trillion dinars. As a result of this computational error, the planned deficit increased to 32.3 trillion dinars instead of 28.7 trillion dinars, as reported in the Iraqi newspaper Al-Waqi'aa.

According to the data of the Iraqi oil export company SOMO, the actual export rate during the first four months of this year was 2.93 barrels per day from the Basra and Kirkuk fields (and without the oil exports from the Kurdistan region?). The average export price per barrel during the first four months was slightly less than $ 60, an increase of $ 15 over the rate of the estimated price fixed in the budget law.

Assuming the continuation of this level of prices until the end of the year, we expect in the basic scenario oil revenues to reach 64 billion dollars. Then an amount of 5.5 billion dollars will be added to it for the exports of the Kurdistan region agreed upon in the budget law, at a rate of 250 thousand barrels per day. Thus, we expect Iraq's total oil revenues to rise to 69.5 billion dollars as a projection instead of the planned 53.4 billion dollars, an increase of about 16 billion dollars, equivalent to about 23 trillion dinars.

On this basis, the planned and corrected oil revenues will rise by us to about 100.8 trillion dinars. After adding the planned non-oil revenues by 20 trillion dinars, we will get the total budget revenues of 120.8 trillion dinars in exchange for the total planned and corrected revenues instead of 101.3 trillion dinars as stated in the law, with an increase of 19.5 trillion dinars according to our projections.

In the optimistic scenario, we assume a breakthrough in the Corona crisis during the second half of this year, and at the very least in advanced industrial countries, which will lead to an increase in global demand for crude oil.

Assuming the commitment of the OPEC Plus (+) group to the current levels of production, it is possible that the average global price of crude oil will rise to approximately $ 70 per barrel, which means achieving an annual average price for Iraqi oil exports of about $ 65 during the year 2021. On this basis we expect a rise in Iraq's oil revenues amounted to about 77 billion dollars, equivalent to about 112 trillion dinars, an increase of about 35 trillion dinars over the revised plan in the 2021 budget.

At first glance, it seems to some that the amount of the increase in oil revenues in the first basic scenario will reduce the planned and corrected deficit from 32.3 trillion dinars to a planned deficit estimated at 13 trillion dinars, and in the second optimistic scenario to a planned and corrected surplus of 2.7 trillion dinars. In this regard, we must draw attention to the fact that this type of in-depth and offensive accounts of economic professionalism does not take into account that the level of actual deficit at the end of the year will in turn be subject to a second variable, which is the difference between the planned and actual non-oil revenues achieved at the end the year. Therefore, we appeal to government agencies and members of the House of Representatives to be careful in their statements in the media, because of the possible confusion in public opinion.

We believe that the non-oil revenues that are planned to rise from an actual 7 trillion in the year 2020 to 20 trillion dinars represent unrealistic estimates, and we expect that they will be around 12 trillion dinars this year at best because of the rampant corruption in the government administrative apparatus, which determines who Achieving this type of revenue on the one hand, and the continuous economic downturn this year due to the Corona pandemic on the other hand.

On this basis, we expect the actual deficit in the first scenario to reach 22 trillion dinars, which is more likely, which means the continued need for borrowing to ensure the financing of current spending and employee salaries.

As for the second optimistic scenario, it will result in a deficit of 9 trillion dinars. On this occasion, we would like to emphasize our previous proposals regarding the only alternative to borrowing, which is to reduce the waste of financial resources, rationalize current spending, and eliminate financial and administrative corruption.

In all cases, it is not expected that the structural financial crisis associated with the nature of the rentier state will end, and that financial sustainability will be achieved this year

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