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Shafaq News / The Ministry of Finance said on Friday that the federal government has no choice in securing salaries but to resort to short-term loans until the end of this year.
In a statement received by Shafaq News Agency, the ministry explained, “ Last week, a number of public statements and inquiries were made regarding the delay in paying the salaries for the month of October. This comes in the wake of the delay in paying the salaries of the month of September,” pointing out that it “confirmed Repeatedly, the government’s current revenues, in light of low oil prices and Iraq’s commitment to OPEC decisions to reduce oil production, are insufficient to meet the government’s current expenditures. At present, monthly oil revenues are less than 50% of the government’s current expenditures. We expect this situation to continue in near future”.
She added, ” To address structural imbalances in public finances, the Ministry of Finance has embarked on a three-pronged program to address short, medium and long-term issues that affect the Iraqi economy,” explaining by saying, “For the very short period, from now until the end of 2020, the Ministry of Finance does not see.” “Any choice but to resort to short-term loans from state banks , which will then be deducted from the central bank. All other options, such as increasing revenues from customs or taxes or levies from the electricity sector, are simply not possible in the short term.”
“Despite the necessity to rationalize and activate the generation of other non-oil revenues, such measures will not compensate, in the short term, for the shortage in oil revenues, given the structure of our economy. All other procedures related to managing the public sector payroll require legislative approval before they are done,” she said. Translate into spending cuts or revenue generation. ”
The Ministry of Finance noted that it “does not seek to increase public debt unless it is necessary and its service is sustainable,” noting that “Iraq’s debt at the present time is not excessive compared to the size of its economy. Public debt in the world has grown tremendously during the past twelve months, To address the negative consequences of the Corona pandemic. ”
She explained, “Globally, public debt as a percentage of GDP is close to 100%. In Iraq it is still less than 75% of GDP. However, the Ministry of Finance is aware of the need to be careful in how to finance the deficit in public finances.”
The Ministry of Finance pointed out that it “was open and transparent regarding the state of public finances and issued accurate and timely information when requested by the House of Representatives. The Ministry is aware of the concerns that may arise as a result of the delay in fulfilling government spending obligations. The situation today is fundamentally different from previous periods when it was exposed. Public finances are under pressure as a result of lower oil revenues. Not only has public spending grown rapidly in the past five years, but the decline in oil production and prices has been longer and deeper than in previous periods, in light of a difficult global economy.
She indicated that she ” asked the House of Representatives to authorize her to borrow 41 trillion dinars for the remainder of the current year to meet the deficit in financing salaries and retirement payments, 19 and 20 dues and other expenditures and investment projects.” “.
She said, “If it is approved by the Council of Ministers and the House of Representatives, we believe that it will form the foundations for dealing with economic issues in the medium term and rationalizing public finances during the period from 2021 to 2023.”
“The Ministry of Finance played a fundamental role in leading the team that put together the white paper. This aims to analyze structural problems affecting the Iraqi economy and provide detailed solutions to solve them. This reform program aims to reorient the axes of the Iraqi economy. The reform program will require a great deal of legislative work.” And institutional and cannot be implemented without the support of Parliament. ”