Iraq's budget for 2017: between austerity and a clear and flagrant deficit 12-10
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    Iraq's budget for 2017: between austerity and a clear and flagrant deficit 12-10



    Iraq's budget for 2017: between austerity and a clear and flagrant deficit

    December 10, 2016 in the Publications

    Budget of Iraq in 2017: between austerity and clear and the inability of Hardcore

    The failure to diversify the Iraqi economy, which depends on oil is very large resources led to more problems facing macroeconomic and social standing problem of unemployment on top of those problems, in addition to inflation and balance of payments deficit and low economic growth.

    And show these problems are due to poor recruitment of oil revenues in order to achieve economic diversification of activating the productive sectors of industrial sectors such as transformational, agricultural, tourism, etc., in order to build the tax base, which increases the effectiveness of diversifying public revenues.

    It is necessary to address the economic problems means, to prepare a general balance in both its current and investment plan for spending and revenue, to be able to cope with those problems, according to the philosophy of the state and its plan to intervene or not, if the state adopts a capitalist system, the principles of the state are limited to the traditional functions of external defense and security interior and justice between the citizens and the budget to be less effective in addressing social and economic problems, and if they adopt the principles of the socialist system the budget will be more face him.

    However, laws investment plans in Iraq is heading now and turn toward a market economy and its laws, but it does not have the mechanism of a real experience for the success of this approach.

    Despite the fact that all public budgets since 2004 has prepared a deficit scheme ended real surplus as a result of ignorance in the planning and ill Altniv- as the real percentage of completion in the implementation of all previous current budgets did not exceed 70% of the planned.

    2017 budget was also prepared on earlier the same mistakes as the Iraqi Council of Representatives approved on 7/12 project the country's budget law for 2017 under the financial crisis experienced by Iraq as a result of lower oil prices and the growing war against Daesh expenses, the Council voted by majority on the financial budget items after semi consensus on its provisions with the exception of the item on a share of the Kurdistan region. The deputies State of Law coalition, led by the Vice President of the Republic article Nuri al-Maliki objected to the region's share and demanding slashing to 13% on the back of a long dispute between Baghdad and the Kurdistan Region on the export of oil, but was voted 17% of the territory, provided that the Prime Minister agree to exchange these allocations from the Ministry of Finance.

    The total value of the budget approved by the government about 95 billion dollars, and a projected deficit of $ 20.5 billion. And built the budget figures based on the price of my guess for a barrel of oil at $ 45, and the export amount of 3.6 million barrels per day of crude from within oil exported by the province of Kurdistan and eliminates the agreement late last year to hand over the province 550,000 barrels of oil a day to the federal government in exchange for receiving a its share of the budget.

    But Kurdish officials say the Baghdad does not comply with the agreement and the province does not receive financial dues, forcing him to sell oil independently of Baghdad, to meet the growing expenses due to the war against Daesh and sheltering hundreds of thousands of displaced people and refugees.

    He said the parliamentary bloc of the Kurdistan Democratic Party chairman Ahmed Muhsin al-Sadoun said his bloc did not attend the voting session, but objections from the beginning of the opinion that the budget, which was approved did not meet its demands.

    He stressed that the budget did not pass solve the outstanding issues between the federal government and the Kurdistan Region , including oil exports, and added that the budget did not allocate enough funds for the salaries of government employees and fighters of the peshmerga in Kurdistan. The Kurdistan Regional Government announced that it would not be binding on the federal budget law if the observations and reservations were not taken into consideration by legislation.

    The government says the territory it needs a month to (733) million dollars to pay salaries, not the 264 million dollars that have been identified to the draft budget.

    Iraq, which depends on the sale of oil revenues to cover about 95% of the expenses will drop the barrel price to less than $ 40 to a lack of oil revenues to be paid in addition to the expenses of the war against Daesh to more loans, which could result in additional financial burden as a result of benefits In addition to the future economic and political dependency.
    The 2016 budget included a large fiscal deficit, because the deficit was about $ 25 billion. It has already been warned a report issued by the International Center for Development Studies, based in London, that the Iraqi budget deficit is clearly threatens the Iraqi oil sector. According to the report, the deficit exceeded $ 50 billion in Iraq would be at risk of bankruptcy in 2017, and the inability to pay its employees' salaries. In regard to the proposed solutions to cover the deficit in the public budget, deputies of the Finance Committee said that it «will be made via the International Monetary Fund and the World Bank and the Islamic Bank for Foreign and loans and the issuance of treasury bonds.

    Through accurate reading of the federal budget for the year 2016 could be the following markings: -

    According to Article 1 b: derived from crude oil export revenue is calculated on the basis of the average price ($ 45) per barrel. Note that crude oil prices, the actual source of much lower. And it mentioned in the same paragraph: that the rate of export of crude oil from the South and the North is estimated at (3.6) million barrels per day, while the quantity exported actually exceeding that amount (500,000) barrels per day. Word in the same paragraph also: Including the amount of (3.6) the amount of barrels exported (250,000) barrels of oil per day from the amount of oil produced in Kurdistan note that the province issued a day (600,000) barrels of oil per day except for the amount of (300 000) exporting barrels of oil per day from Kirkuk. And it stated in Article-2-II-B: authorizes the Federal Minister of Finance to continue to borrow for the purpose of bridging the actual deficit in the federal budget, or for any other purpose stated in this law, in spite of a surplus equivalent to (172 trillion dinars) almost for the years (2004-2014 ) and more than 15 trillion dinars surplus of 2015 budget and to compensate for the decline in crude oil prices, the source and the increased need to find alternatives, the government has reduced some taxes under Article-24- (b) in the budget of 2016 reported in the budget of 2015, including cars of all kinds, which decreased the tax rate of 15% to 5%, cigarettes, and alcoholic beverages from 300% to 100%.

    At a time when the government should not seek to repeal some of the unnecessary expenses and rationalizing the others, it has increased some operational allocations in the budget of 2016 as follows:

    Ministries To balance the 2015 operating allocations Operational disciplines to offset the increase in 2016 The difference
    Presidency of the Council of Ministers 1355 2051 696
    Shiite Endowment 405 415 10
    National Investment Commission 10 16 6
    Finance 17,335 18265 930
    Labour and Social Affairs 1547 1556 9
    Defense 5057 6071 1014
    Justice 452 475 23
    Education 727 780 53
    Transport 132 198 66
    Construction and Housing 961 1018 57
    Water Resources 232 265 33
    Petroleum 999 3674 2675
    Planning 43 62 19
    Industry 46 1089 1043
    Higher Education and Scientific Research 2733 2801 68
    Electricity 1910 2709 799
    Telecom. 159 176 17
    Value / billion Iraqi dinars - - Billion Iraqi dinars 7518

    The question, after reviewing the table above, is: Where did the surplus budgets of the previous (7518) billion Iraqi dinars, and why the government complaining about the fiscal deficit, did not work on correcting errors contained in Bnoad budget in line with the requirements of the stage.

    The Prime Minister said Haider al-Abadi: "The oil revenues planned for 2017 amounted to 68.4 trillion Iraqi dinars, and non-oil revenues of 11.6 trillion dinars," noting that "the price of a barrel of oil to balance in 2017 was estimated at $ 42.

    He added that the estimated value of the loan to fill part of the planned deficit of 5.6 trillion dinars, indicating two trillion dinars allocated share of the cabinet to support the farmers.

    The deputy chairman of the parliamentary Committee Faleh force, said that "the appointments in the budget of 2017 will be in the four ministries only, the interior, defense and health and education," noting, "it was stopping all other appointments in ministries."

    The Member of Parliament Hanan al that the budget was built on the mistaken speculative, including: the assumption that a large speculative such as assessing compensation of employees' salaries by 39 trillion deficit while the real exchange 20 trillion, and identified the provinces of 400 million dinars, and did not get a quarter of the amount, and confirmed Fatlawi that increase taxes on staff is a crime against them, surprising the allocation of intermediate goods increased by 22% and the country in a state of austerity.

    It is speculative mistakes Fatlawi, according to the allocation of government emergency reserves to balance by 2016 with 112 billion it did not happen to the Ministry of Education $ 75 billion for the printing of school textbooks did this reserve ministering school students, calling to cancel the emergency allocations; because it will open the door to corruption!

    Financial advisor to Haider al-Abadi appearance of Mohammed Saleh, said that revealed expenditure for the year 2017 less than the total 2016 budget by 5%, and 86% of oil revenues from total revenues, adding that the state status of austerity and increase deductions from employees' salaries of 3% will reach 4.8% to support the displaced people and the crowd People with doubts arrival of these amounts to its rightful place, which has carved out for him, and this is evidence that the budget suffered a large deficit is supposed to employee participation bridge the deficit, and the direction of the state towards increasing borrowing either from or income from abroad to cover the deficit and the worst of borrowing is a bad hire amounts borrowed .

    From the above we conclude that Iraq's oil wealth began to lose value in the Iraqi budget, not the absence of the surplus that was achieved by the oil wealth before 2013 only making the Iraqi economy suffers the problem of debt. The trend towards diversification of the Iraqi economy, which requires reducing the proportion of oil revenues to other revenue such as taxes, fees and public sector earnings and revenue capitalism and manufacturing revenue and earnings of the agricultural sector and others.

    Shatha Khalil

    Unit Economic Studies

    Links for Research and Strategic Studies Center

    Sources:
    Euphrates Center for Studies / read in the Iraqi federal public budget for the year 2016

    NRT reports

    Conclusion

    Twilight News

    Network news Informatics

    Iraq Press / text of the 2017 budget law


    Source
    Last edited by Loopback; 12-10-2016 at 12:33 PM.



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