Infrastructure Bank .. strategic option for the development of Iraq

Dr.. Kamal Al-Basri
1. What is the objective of the proposed:
worry us all of the economic situation through which Iraq and of the status of lower oil prices and halt investment projects in the provincial projects, and worse, to stand before them with folded arms as if the event was not expected or there are no alternative solutions, the article objective to clarify the importance of establishing the infrastructure bank as an effective way to benefit from the oil revenues and other sources of funding for the construction of infrastructure at the level of the federal government and local governments in the governorates, and show that this use will serve the interests of present and future generations alike and help to protect the economy from fluctuations in oil prices. 2. What is the current problem often represents oil revenues finance money easy to gain, so that the value of the work carried out to produce a barrel of oil and one marketing is much less than the realizable value of the sale, and when this money is at the disposal of the government, which does not have the financial dealings transparent, as does in Iraq , (and the rest of the vocabulary of good governance), dispose of money, away from the economic feasibility and responsibility standards, where officials find themselves in front of a large area for the disposal of public money is not commensurate with the real money value, usually government spending takes the dimensions gain political and utilization represented an increase of wages the level of productivity, and embarking on economic support expenses, as a support prices of oil derivatives, and spending on expanding the size of the army and security forces ... etc. And it, as is the case in some countries, often oil source of failure and retreat rather than be a source of progress and prosperity. Form of economic mismanagement of the oil wealth in Iraq falter in the economic development process that led to the lack of financial resources enough to finance projects Economic. During the period, 2006 - 2014, Iraq received more than $ 500 billion from oil exports. Used all the oil revenues to finance the annual federal budget, it has been allocated, an average of 0.30 percent of the total public expenditure of public investment projects and with the diminutive figure, only 60 percent did not spend them. This ratio is low does not meet the objectives of reconstruction and even prolong the suffering of the citizens. Examples of the government's inability to provide basic services are: The 85 percent of the population have access to drinking water. Although 32.2 percent of the population have sewage systems services . citizen does not benefit from the public electricity grid, only 11 hours a day, on average. The deficit in school up to 8846 schools. decline has forced oil prices, recently, the
government to freeze all investment projects budget Federation for the years 2015 and 2016, with a view provide the necessary liquidity to cover the bloated operational spending. The government plans to borrow by issuing bonds worth $ 5 billion at a high interest rate equal to about 10 percent, (is likely to increase the value of bonds to reach the largest amount). The issuance of these bonds does not mean solving the problem of the continuing suffering of the citizen, no doubt that the continuation of the suffering and the absence of the application of the vocabulary of good governance will lead to a further threat to political stability. 3. How to address this problem? In 1951 the Iraqi government established the Reconstruction Council for the purpose of achieving the maximum benefit from oil resources and to provide efficient management of economic projects. Anzlk decide the allocation of 70 percent of oil revenues to investment spending, (infrastructure projects), it has been useful and rich experience of Iraq, and constructed a lot of the necessary infrastructure. However, the allocation of this ratio may change; and since 2005 and has so far allocated 30 percent of the ratio of public revenues, (which oil accounts for 95 percent of them), where allocated to investment projects. And that's where the financial allocations are scarce and depends on the price of oil, which are difficult to predict, there is a need today to revive this council or a similar entity him. The many governments in many countries of the world to establish development banks, (Development Banks) to finance economic development projects, which are institutions General The government determine its strategy and the appointment of its Board of Directors, usually the private sector take part ownership of the shares of these banks and the participation rate ranging between 1 Palmih- 49 percent of the total shares.These banks have made ​​outstanding achievements in most countries of the world, and it is up to Iraq to benefit from this pioneering experiments. 4 for sale. What funding mechanism? There are different options for financing the proposed Development Bank including: a) receive allocations from the federal budget. B) the use of savings and deposits of citizens. C) borrowing from domestic and foreign financial institutions. E) the use of the Bank's property revenues, (if found ). often check these banks profits and be performed independent and able to handle the non-financial government support in various forms. In fact some development banks receive government financial support to fund privacy projects. This support should not be seen, as a support for the continuation of the work of banks basis, in fact, are government payments to banks to convert for the purpose of supporting the benefits of some of the social and economic dimension of the projects, as projects desalination borrowing costs and the building of schools, hospitals, etc ... . As long as these banks owned by the government, they will have government support, which reflected positively on the loan guarantee and other financial commitments. This government guarantees granted Development Bank the opportunity to obtain loans from international financial institutions at low cost, which will reflect positively on the loans offered by the Bank for domestic use which, Hence this feature will play an important role in reducing infrastructure projects. When we refer to this should not be dealing with the bank to private banks existing account, in other words, the government must ensure the fairness of support and its effects on other banks. To support the strategy of decentralization in the governorates should be distributed liquidity available to the Bank annually to the provinces according to population density for each province , according to the economic feasibility of each project, and requires all bank transactions can enjoy the transparency, efficiency and compliance with the law and takeresponsibility.. 5. What is the demand for his work? In the case of government approval for the proposal to establish the bank van to be done immediately: - A - consultation with the international and Bank IFC to develop the details related to the project. B - work to get Cabinet approval for the establishment of the bank. obtain approval the House of Representatives. (d) demand from the Ministry of Finance activate the work on the project. 6. Do you lose the provinces and regions of the bank not to initiate infrastructure? Federal Budget Act of 2006 approved the establishment of three banks for the development of an initial capital of $ 500 million can be increased. Paid by the Ministry of Finance over three years and represents the contribution of the regions and provinces in the capital and in the future be financed through bonds and loans from domestic and international markets as well as the issuance of borrowing from the regional and provincial coffers. The objective of the establishment of these banks is to mobilize available in the regions and the provinces of resources and support councils in the financing of specific projects without the need to return to the state budget. The work on the basis of partnership between the provincial governments and the provincial councils and the private sector or foreign investor plans. That the establishment of these banks, in addition to the provincial development programs will be an important step forward towards the promotion and development of regional development and to the fruits of development a fair distribution among the regions of Iraq and reduce the disparity in the standard of living of citizens in the whole of Iraq. However, this project despite the extreme importance not seen the way for implementation He remained a dead letter. Payment legislation that decentralized management law, without work to provide the funding mechanism, like those who want to fly with one wing. The question is required to know the answer: Why these banks did not originate? If there is a patchwork of obstacles What are the obstacles? Who is responsible for preventing labor law was enacted in 2006, and who is responsible for depriving the provinces in financing investment projects? Although the legislative and executive government is responsible for the absence of this law, the institutions also bear the responsibility for the control and alarm Althdhir overlooked work of the law began to serve the public citizens.