Today, Wednesday, Adviser to the Iraqi Prime Minister for Economic Affairs, Mazhar Muhammad Salih, revealed the preparation of a budget that he described as “precautionary” for the year 2022, indicating that the new budget may depend on borrowing.
Saleh said in an interview with the official “Al-Sabah” newspaper, “The draft budget for next year is ready, and for the first time it contains a plan for investment projects that is clear and built for a period of three years, and each of these three years includes allocations so that there is no commitment and delay,” revealing that the 2022 budget It was built on the basis of an oil price of $50 a barrel, despite the fact that current oil prices are over $80 a barrel.” null
He pointed out that “the government adopts this price as a precaution, because Iraq is a rentier country and lives on oil that is mortgaged at world market prices,” noting that this procedure will create a hypothetical, and not real, deficit, meaning that if there is a surplus of oil, it will cover budget obligations, If this is not achieved, the state will borrow.
He pointed out that “the possibility of borrowing has existed in all Iraq’s budgets since 2004 and until today as a precautionary part with a hypothetical deficit, due to the previous and current financial management law, which requires the financial authorities not to go to an increase in oil prices,” adding that “the borrowing is placed in the budget for necessity, as it was.” In the 2021 budget, which contained 29 trillion dinars (more than 19 billion dollars), but there were practically no borrowings.” Arab economy
He went on to say: “If there is permissible borrowing, called financial space, it does not affect financial sustainability in the future,” explaining that “the borrowing in the budget is internal and external, but the government resorts to the internal for its ease and low risk.”
The economic advisor to the Iraqi Prime Minister ruled out the possibility of the impact of the new mutagen “Omicron” on the economy in general, indicating that the new mutagen may reduce oil prices, but there will be no complete closures, as happened previously for the global economy, because the world adopted the closure in advance, and great losses occurred. .
The Iraqi budget depends more than 90% on oil sales, which were affected last year by the Corona pandemic, which prompted Iraq to move towards borrowing to bridge the budget deficit.
The Chairman of the Ministerial Council for Energy, Minister of Oil, Ihsan Abdul-Jabbar, stressed the need to implement long-term projects in the field of energy, stressing in a statement the importance of energy in supporting the national economy and ensuring the rights of future generations.
He called for the completion of the “sovereign fund” project, explaining that this fund can achieve justice in the distribution of revenues from oil and gas, and how to invest and develop them through promising programs and projects, and clear plans commensurate with the great development in the world.