2016 Challenges and Solutions budget

January 6th, 2016

Adnan al-Janabi *

Oil prices are expected to improve in 2016 due to continued non-conventional oil production in the United States and Canada, and the anticipated production increases from Iraq and Iran.
wars and crises create great challenges, but also create opportunities for bold solutions.

Revenue increases
The task increases revenue from taxes or reduce salaries and jobs do not come, despite the importance of these solutions and others. But they remain high compared to what could come from increases in crude oil production and conversion of gas burned to the energy source of fuel for electricity and special material for an initial public economy. Therefore, priority should be given in allocations and give loans and deferred payment to these fundamental tasks.
1 - increase oil source could exceed half a million barrels per day in 2016 and which can bring to the treasury more than seven trillion dinars annually.
2 - The provision of gas to the power plants can provide more than 300,000 barrels a day to go for export worth more than four trillion dinars annually.
That any bold plan to provide additional resources to the treasury can not match what has been provided by the increase of crude oil production and conversion of gas burned (free gas) to electricity and other industrial and household uses, to provide additional petroleum liquids for export.
3. radical solution to end support for petroleum products is in the pricing of crude oil at the well for everyone at a price of export, and inside a discount does not exceed 10 dollars per barrel. This reduces Aovermoard additional allocations for the importation of petroleum products. (Can continue direct support for public transport white oil from the Ministry of Finance for less than a trillion dinars).

Reduce costs
Reduce the largest expenditure of the energy sector also comes:
1 - re-negotiate with the oil companies operating in the licensing rounds toward loaded costs for capital investment and repayment through his eyes servings of future production increases.
2 - the collection of electricity consumption to nearly 100% :, Taking are now collecting the equivalent of 20% of the electricity product only, because of evasion citizens and overtaking on the network of government and refrain from payment. The solution in the division of power into three units calculation lies.
A. production: sale of electricity to the main transmission and distribution network.
(B) Transportation: The transportation and distribution networks, the main selling 100% of electricity to the provinces.
(C) collection: the formation of arithmetic units in the provinces and districts in the form of companies (public, mixed, private) and not let loose do not receive electricity as of 01/01/2016. Setting to work and this system must from now and declare to the people and placed her plans in coordination with the provinces.

Ration card
Conversion ration card to cash, to Anhaouagr and corruption in the ration card and that at least 25% of the total allocations. A large slouch in management and nearly 60,000 distributors who rarely without one of corruption. There are nearly four million Iraqis displaced people who are hard to reach in-kind components for the ration card.
The daring of this waste and corruption, the solution is to turn the ration card to the cash value of the rights to the beneficiaries. And Msthakoha were:
A. displaced.
(B) citizens who do not respond to their name and retired employees of state records (eight million name).
C-are not covered by the income tax from the private sector.
It is useful to the gradient of the ration card to comprehensive social security during subsequent years.

Economic reforms
(A) the public sector:
Public sector companies constitute a heavy burden on the state budget. And all public companies losing the overall economic assessment. Even companies that allegedly win, they are either parasitic such as refineries and oil products distribution companies, or Matahh on financial corruption resulting from the referral of its government contracts at inflated prices contain a high proportion of corruption.
The government's approach in the formation of committees and carry out studies for the transfer of public companies to the private sector may have passed more than four decades without deduction, and other contracts will proceed without completion.
Rapid solution is to convert the workers in these companies for a transition body re-trained or retired or qualified them in companies that take over the management of these institutions operate, and work around urgent and accelerating the conversion of these public companies to the exposure of its shares on the stock market or sold to joint-stock companies public auction to the requirement that the majority of investors are stock in the new companies to the Iraqis (natural or legal).
This includes of course all the sale of petroleum products and the central market and other stations.
The Central Bank
1 - end the (currency) Auction and move on to letters of credit system in relation to foreign trade and government contracting and entrusted this work approved banks.
2 - to abandon the policy of (flotation programmed) to reduce the Iraqi dinar exchange rate because that would cause inflation increases the poverty of the poor and Ainf (exports) to the lack of exports to remember.
3 - should be directed loans from the central bank and specialized banks to support the housing sector (the benefits of nominal) and industrial and agricultural projects that occupy more than five workers and the benefits of not more than 2.5% and the duration of the payment ranging from 20-25 years for housing and 7-10 years for projects industrial, agricultural, and should reconsider the distribution of loan rates and increasing the share of housing to third.

(C) the banking sector:
1. should end the monopoly of State-owned banks such as Rafidain and Rasheed and Trade.
2. the integration of sectoral banks (industrial, agricultural, real estate, housing) and linked to the development of a unified council reconstruction fund.

(D) Development Board
Legislation Development Board Act, and to link the work of the investment by the body, for the implementation of housing projects and strategic projects that exceed provincial or of mutual benefit such as main roads, ports, airports and other borders.

E - the pension fund
It assumed that does not distract from the pension fund only to the already paid pension entitlement for a period of not less than (15) years. The pension fund is an investment and insurance fund, and not social welfare. It provides for laws to give them rights to pension exception to the rule, it must be funded entitlements from the Ministry of Finance special account, the pension fund to remain self-financing. And it is supposed to be in the pension fund surplus as long as the number of pension entitlements paid more than the number of eligible neighborhoods retirement.
It should also establish a social security fund in which the private sector contributes to finance the retirement of its affiliates and self-financed.

* Economist
Iraqis economists network site