The Iraqi budget is set to be increasing from 96.663 trillion ID (US$ 82 billion) in 2011 to 115. 097 trillion ID (US$98 billion) in 2012. Yes, political problems and the boycott of parliament (as well as holidays!) have meant that the budget hasnít been ratified. Who knows, it is the 9th item on todays parliamentary agenda.
In the last few weeks the Central Bank of Iraq announced that the average income in 2011 was around US$5,200, and that this will likely go up to US$6,000 in 2012. Iraqi oil production average for 2011 was 2.7 million barrels per day, and the target for the 2012 year end is 3.4 mb/d.
Our GDP growth rate is projected to be 9% for 2012, which will exceed Chinaís. The comparison may not strictly be valid as we are just at the beginning of our growth, but at least we are heading in the right direction.
The priorities in the upcoming budget are (1) oil infrastructure projects, (2) security and (3) social security. But not far behind, and most importantly in my opinion, is education with an estimated 11,476 billion ID (US $9,8 billion) to be spent on it in 2012.
Weíve also talked about the problems of an over-sized bureaucracy, so its always-good news to hear that at least 58,000 people will be hired in 2012! Itís possible that these are jobs that are actually needed. But we know thatís not true when we look at why there will be 17,000 new jobs in Kurdistan: to help meet their national quota. This is essentially the problem with Iraq, a problem that the Erbil agreement only institutionalised. Jobs and posts are given not based on competency or national interest but based on meeting sectarian quotas. Some might say that it is only fair that Kurdistan gets it fair share of jobs. And this is true; it is fair for Kurdistan. But is it good for the country?
I donít mean to single out Kurdistan on this point, every group in the country is doing the same thing: whereís our share? In itself that is not a problem, people want their interests met. But when the Ďourí is a sectarian or ethnic identity, it is a problem. Last week Maliki said that he did not like the fact that people talk of Iraq being a cake, and everyone trying to get their slice. But this is the reality in Iraq. The point I am trying to make is that sometimes there is an inherent tension between interests of a particular group, and the broader national interest, and the budget process highlights this.
Perils of a Socialist Economy Jan.11,2012
On my recent trip to Baghdad I met a manager of a state-run naseej factory (معمل نسيج) factories that make cloth material like cotton or wool for clothes, carpets etc. He told me that they had over 5,200 employees at the factory. It sounded impressive. He then told me that they spend nearly 3.5 billion ID (US$3 million) on wages per month. That worked out to around 670,000 ID (US$573) as an average monthly salary.
But the most surprising news was yet to come: 300 million ID. What you might ask is that; the amount they spend on electricity given that itís a huge factory? The amount they invest every month? No. It was the monthly profit, or value of materials produced. 3.5 billion ID on wages for a measly 300 million ID of products. The factory basically runs at more than a 3,200 million ID loss per month! Thatís a loss of 615,000 ID (US$526) per employee per month. So it turns out that the factory is simply a glorified social security cash dispenser.
Then you think, what on earth are the 5,200 employees doing every day? Thereís a joke in Iraq about what the average Iraqi working day: you arrive at 9, have breakfast till 10, work for half an hour before having a break for tea and catch up with friends, which also lasts an hour, spend another half an hour on facebook, before preparing yourself for prayer at 12, which somehow also lasts an hour, then leave at 1. Not so funny when you think about it.
Most estimates put government employees at between 60-80% of the Iraqi labour force. Itís difficult to be sure because itís hard to measure what counts for employment or unemployment in Iraq. People who sell vegetables on a stall, who when asked, believe they are still unemployed.
Worst of all, those who would have looked at the Iraqi budget for 2012, they would have noticed that nearly 75 trillion ID is going to current expenditure (نفقات تشغياية) which is primarily salaries,