Budget crisis or budget numbers ..

January 6th, 2016

Budget crisis or budget numbers ..
Samir Abbas Alnasiri *

The economic conditions and exceptional through which Iraq over the past two in 2014 and 2015, and that had a clear impact on the delay in the implementation of plans and program development projects scheduled and planned in the budget for 2014 and that have not been approved already and budget for 2015 and carried out according to several limitations, notably the drop in oil prices a global war on terror, and the backlog of previous years in the chaos and poor planning in the conduct of the affairs of the economy and money management year, prompting the government offers a range of remediation decisions which are, in fact, Trhiqih measures designed to put pressure on government expenditure in order to secure additional resources for the budget for 2015, which suffer from the constraints and obstacles in the application Everyone knows that the Iraqi economy is based around mainly on oil imports, and estimates of projected price for 2015 was an average of $ 56 a barrel and quantities marketing up to 3.3 million barrels per day and the revenue total capacity of up to 119 trillion dinars did not check for the above reasons, which led to high the planned deficit of 25 trillion dinars to the borders (40) trillion dinars, almost, confusing and a decade of government mission in full control of the conduct of the economy, according to the decree of his reform program, and despite the significant role played by the Commission on the crisis in the Council of Ministers for the management and distribution of resources But a big gap and limited solutions. And it will end in 2015 after less than 40 days and we believe that the case will continue in this way and without the problems and constraints outstanding solutions which can be identified as follows:
Preparation of budget constraints
1 - the continuing decline in oil prices to average $ 40 a barrel as the global oil market outlook at least for the years 2016 and 2017
2 - Rising war on terror expenses
3 - continuing economic recession and liquidity crisis, and predicted the bankruptcy of some private banks.
4 - the continuation of the Central Bank of the external reserves of hard currency decline, which currently ranges between (58-60) billion dollars and will be reduced according to expectations in 2016 to (50-55) billion dollars in better than expected.
5 - expectations of a drop in prices of global oil and the weakness of Iraq's opportunities in the marketing of 3.6 million barrels per day as expected in the budget of 2016, which will not be optimism achieve them because of Iran, Libya and return to the oil market and the decline in imports of China and India from the oil to the low rate of economic growth have in addition to the the existence of stocks to the United States, enough for several months, which means that the glut in supply will be high and will create competition between OPEC countries on the marketing of its production with great difficulty.
6 - decisions austerity packages and economic reforms, the government did not take the way of the full implementation about.
7 - the continuing problems between the federal government and the Kurdistan region and about particular with regard to the oil agreement that was agreed upon by the parties has not been implemented, which exported 300 thousand barrels per day from the rights of Kirkuk and (250) thousand barrels of fields of the region where the data indicate that the achieved rate actually exported for 2015 is not to exceed 300 thousand barrels per day of the total 550 thousand barrels per day.
8 - continued confusion vision in the coordination between fiscal and monetary policies and the insistence of the Central Bank to work in accordance with the monetary policy window applications since 2004, when the issuance of law 56 for the year 2004 without an attempt to reconsider the applications and tools Despite the many actions carried out by the Central Bank of Iraq in an attempt maintaining independence on the one hand and cooperate with the government in providing support to her and to the banking sector initiatives and projects are not up to the present has received required of beneficiaries support in addition to the lack of relevant ministries cooperate in helping to control the exchange rate of the Iraqi dinar and the movement of sale of foreign currency such as the Ministry of Commerce and Ministry of Finance and the Ministry of Planning and the Ministry of the Interior, making the central bank bears full responsibility.
9 - increasing attack the media for flags non-economic and non-specialist at the Central Bank and banks which contributed to the arrival of the economy to the brink of collapse and the arrival of the Iraqi banking sector because of the charges against him to the financial meltdowns in order to circulate irregularities and accusations directed to some of the private banks is discreet on the other banks which offended economy National and to the important role in financing and investment aspects carried out by the Iraqi banking sector.
All of the cons and accumulations and determinants of ill behavior of public money and ignorance administrative, technical and lay persons who are not suitable in places important economic institutions and the dimensions of technocrats, experts and professionals in the implementation of economic programs of the Iraqi state because of the quota system and interoperability led to the arrival of the economic situation to such a degree of weakness and lack of control over Things requirements.

Analytical reading in the budget
Proposed for 2016
Budget estimates for 2016 adopted on the basis of average price of 45 dollars per barrel and an average of Marketing (3.6) million barrels per day, guaranteed by 250 thousand barrels per day of oil produced in the province of Kurdistan and (300) thousand barrels per day of oil produced in the fields of Kirkuk, a Estimates for the budget itself in 2015 with regard to the agreement between the federal government and the Kurdistan region, which indicate the results of implementation to non-transparency and lack of implementation.
Therefore, the revenue achieved in the light of the above estimates will be around 70 trillion dinars and non-oil revenues up to 14 trillion dinars and an amount to cover the total expenses up to 113 trillion dinars and the allocation of 83 trillion dinars current expenditure and 30 trillion dinars for expenses investment and this means that 74% of the total expenditures are operational and 26% are investment expenses and that the total deficit, which will be achieved is up to 29 trillion dinars. Despite the lack of final accounts for 2014 and the lack of clarity and the completion of the financial accounts to balance in 2015, but the reality of the situation and the implementation results confirm that the planned figures are unrealistic and can not be achieved in the case of the continued glut in oil supply globally and entry marketers new and great momentum such as Iran, Libya and indicators and local studies petroleum can not sell more than what was sold in 2015 and a small increase of not more than 400 000 barrels per day is expected to be exported at a price not to exceed $ 40 per barrel per day, or even the order of that of 2016 at the earliest. This means that economic calculation precise, and logical, which must be adopted in the preparation of the budget for 2016 is to identify the negative aspects relied upon by the Ministry of Finance in its preparation and overcome, I think that the House should be taught these negatives, and being realistic adjustments and calls for the Ministry of Finance and the Cabinet that he be in 2016 and the economic balance and realistic budget The budget crisis and emergency, not the budget figures is not possible application.

The negative aspects of
The preparation of the budget for 2016
1 - lack of clarity of economic targets.
2 - the lack of transparency in economic data as desired and actually adopted for the preparation of the budget for 2016.
3 - poorly defined role of the private sector in the development of non-oil resources.
4 - Non-define the role of the productive sectors and to encourage the local private industrial sector also reported the government program.
5 - budget did not include defining the way for the implementation of economic and financial reform roadmap.
6 - is not specified economically viable investment projects that serve the economic development and economic reforms and the absence of central authority, which tracks implementation, review and evaluation.
7 - not to resolve the problems and the settling of scores between the center and the Kurdistan region in terms of oil export agreements.
8 - Non-enactment of the oil and gas law and his presence on the shelves of the House of Representatives for several years.
9 - failure to address the private sector entitlements (contractors and companies) contractors with the government on the implementation of the projects and then the implementation of more than 50% of these projects.
10 - not to compel government and private banks to the implementation of the central bank initiative to allocate 6 trillion dinars for the financing of small and medium enterprises at an interest rate not to exceed 2%.

Proposals re-estimates
Budget for 2016
First, given the expectations of the world's oil market until 2020, according to the findings of the experts, the oil price that we propose a balanced adoption is $ 40 per barrel instead of the proposed price of the current government (45) dollars per barrel.
Second: As planned quantities marketed for Iraqi oil during 2015, amounting to 3.3 million barrels per day has not been achieved, which stood at an annual rate of no more than 2.9 million barrels per day for 2015 as well as a group have not been marketing only 300 thousand barrels per day of oil of Kirkuk fields Kurdistan region instead of 550 thousand barrels per day as well as do not expect to be executed marketing (3.6) million barrels in 2016, which requires to be re-calculated quantities planned marketed by no more than 3.3 million barrels per day on average per year for the year 2016.
Third, so it will be planned total revenue from oil exports for 2016 up to 57 trillion dinars and not (69.7) trillion dinars as stated budget now before the Iraqi Council of Representatives.
Fourth: The non-oil revenues in the light of the keenness and seriousness of the government measures for economic reform and private about what the promotion and the follow-up to reconsider the tax and customs duties, taxes and other policy in light of recent decisions will be achieved planned amount in the budget is 14 trillion dinars will be total realism and logical revenue (71) trillion dinars.
Fifth, for the purpose of reducing the current expenditure and investment expenditure and increase revenue we suggest the following:
1 - introduction (National Provident Fund) deposited the amounts obtained from outside the proposed oil and non-oil revenues in the budget tables and rely extra revenues and from that serving the people is the work of voluntary does not require a meeting to pay the salaries and allowances and including that Iraq is going through an economic and financial crisis suffocating propose the following :
(A) non-payment of allowances of all kinds of degrees contained in the functional class (upper a) and disbursement of salary only except for the allotments own conduct of business of the presidency and the presidency of the Council of Ministers and the Presidency of the Council of Representatives by 50% reduction of the proposed allocations in the budget submitted by the government.
(B) withholding allowances members of the House of Representatives and disbursement of their salaries and the salaries of all protections according to the last decision of the feminine protections
C deduct 50% of the allocations of deputy ministers, advisers, directors-general and their grade Kedjar compulsory and an interest rate of 6% over the 2016 pay them after the demise of the current economic conditions and the improvement in the financial situation of the state.
W deduction of 20% of all state employees allowances for degrees (the first - the third) and the fulfillment of the 80% of the allocations only and the deduction of 10% of all state employees allowances for grades fourth, fifth and considered withholdings Edjara compulsory to meet interest during 2016.
2 - (the Board of reconstruction) and according to the budget law for 2015 The Board shall have the following:
(A) inventory and re-economic feasibility for large projects that have been implemented in the provinces and special about that was implemented more than 50% of the project on the study of the project or be a strategic infrastructure and is included within the budget.
(B) determine priorities in the exchange and implementation in light of the urgent need for such projects in each of the governorates.
C- give priority Basra province, especially along the lines of the Kurdistan Region as the basic conservative oil-producing source for 2016 and the urgent need to implement strategic projects.
D withdraw 80% of the allocations earmarked for total capital expenditures of $ (30.4) trillion dinars from the provinces and the relevant authorities to the Council of reconstruction and allocate 20% of them to the provinces and other parties for the purposes of a walk some dues Contractors and implementation that can be executed from the projects according to importance and priority.
(C) the power to authorize the implementation of projects for the year 2016 because of the critical economic conditions for the reconstruction exclusively Council and withdraw the authority of the provinces for this year only as a crisis and an emergency budget.
(H) that it will achieve a reduction in investment expenditure by at least 20% and the equivalent of 6 trillion dinars and current expenditure by at least 10% and the equivalent of 8 trillion dinars and will also be savings which will be achieved up to 14 trillion dinars and will also be the amount of the deficit up to 42 trillion dinars, down from savings of $ 14 billion the amount of the deficit (28) trillion dinars and it is.
Sixth: The proposals plug
(A) domestic borrowing of the Iraqi banking sector
(B) on external borrowing as stated in the proposal of the government in the 2016 budget before the House of Representatives.
C formation of high import body to prepare a curriculum import of the state according to the priorities of availability of appropriations and pull the powers of the ministers in the stroll contracts and authorize the body above study, the validity and the ratification and implementation follow-up exclusively with the exception of the Ministry of Defense, Interior and security agencies and national security.
D take this body to prepare for the state import and follow up implementation of the Platform for each of the ministries
(C) to stop the import of semi-staple consumer and recreational materials and support agricultural and industrial domestic production and be our motto for the year 2016 (import complement local production, not a rival to him) and limiting the import duty on basic necessities: food, medicine and supplies electric power to secure the oil industry, gas and minerals and the requirements of the perpetuation of the war on Remember terrorism and national security.

* Researcher and economist
Iraqis economists network site