With the spread of the coronavirus globally, many countries around the world face several challenges in the absence of any looming solutions so far. Economies are the most affected by this virus that led to restrict the movement and the freedom of travel between countries, limit the transport of goods by sea and land, and raise spending on precautionary measures to limit the virus spread.[1]” Since the discovery of the virus in January, the stock market has not declined only in China, but it has impacted the Asian and the American markets as well.
On February 24, the Iraqi government announced that the virus has entered Iraq, as Najaf Governorate recorded the first infection of an Iranian religious student[2]. The resigned Prime Minister Adel Abdul-Mahdi announced the forming of a Crisis Cell, according to Order 55 on February 3, which seeks to reduce the spread of the virus, preventing its transmission in other regions where no cases of infection were recorded, and working to implement the decisions of the cell in all of Iraq.
On February 26th, the Iraqi Minister of Health announced a number of precautions to limit the spread of the coronavirus inside Iraq, and work to follow-up on matters and deal with them based on the situation. Among these precautions:
- Suspending travel between Iraq and China, Iran, Japan, South Korea, Thailand, Singapore, and other Asian countries in which cases of infection have been confirmed.
- Suspending official working hours in educational institutions and universities.
- Prohibiting the gatherings on religious occasions, among others.
- Reducing official working hours in government institutions to 50% until the beginning of the month of next.
The situation developed quickly in most governorates, and measures were taken to stop the spread of the virus. The crisis cell took a number of measures on March 15, to reduce the spread of the epidemic and control the situation, including:
- Imposing a complete curfew in Baghdad for 7 days, authorizing the governorates to do the same, and suspending official working hours throughout the country.
- Suspension of flights to and from Iraq for 7 days.
The Iraqi market has been affected by the spread of the coronavirus and the government measures taken to contain it. Iraq depends on exporting oil and its revenues. Its annual budget depends on international oil prices. While many countries take financial and legal measures to adapt to the challenges of an epidemic or natural disaster that has the potential to harm the economy, Iraq has been “without a budget for this year, and without an effective government for nearly four months.[3]“
In its domestic markets, Iraq relies on imported products despite the Iraqi government’s prohibition of importing some vegetables and construction materials in 2018 and 2019 to support the national economy. However, these measures were not beneficial because Iraq has poor industrial infrastructure, inconsistent development plans, and a lack of economic policy. These have made it difficult for Iraq to be economically isolated, as it depends on importing consumer needs, construction materials, medicine, industrial and grocery items from neighboring countries such as: Turkey, Iran, Jordan, and others.
With the Crisis Cell’s decisions coming into effect, the Iraqi market faces huge problems. Restaurants, cafes, and commercial complexes have been closed in most Iraq’s governorates, especially in the capital Baghdad. The authorities have closed about “3 thousand restaurants, which created a large army of unemployed people throughout the country.[4]” This will affect the purchasing power inside the country. For example, their owners of these restaurants are required to pay the monthly salaries even if they are closed. If the owners of restaurants or shops do not pay these salaries, most workers will work in other places after the crisis end.
Despite the Crisis Cell’s exception of food stores, vegetable markets, etc., which citizens depend on for their daily needs, they face weak demand due to the imposition of the curfew. The continued closure of many commercial and financial centers, banks, service institutions, restaurants, cafes, and cinemas will harm the Iraqi economy.
Perhaps the Iraqi local market will face a shortage of raw materials and food due to the closure of land, sea and air borders. This will lead to an increase in prices of goods stored by merchants, thus creating a new crisis instead of resolving the main one.
With the collapse of world oil prices “below $ 28.42”[5], Iraq has lost half of its financial revenues. Muthir Mohammed Saleh, the economic adviser to the Iraqi government, said that “oil exports constitute %98 of foreign currency flows to Iraq, while oil constitutes %45 of the gross domestic product, and %93 of the revenues of the public budget, which makes it the main resource for the economy.[6]” Declined oil prices will cause a major shock in the Iraqi budget if it is voted on in the coming weeks. Also, they will impact the health situation in Iraq due to the scarcity of financial resources allocated for health services.
Politically, Iraq is facing another challenge, choosing a prime minister to succeed the resigned Adel Abdul Mahdi in November 2019. The political blocs have not been able to name a consensual candidate who is acceptable by all parties. If the number of casualties rises and the epidemic spreads in all provinces of Iraq, Iraq will need a government that can prepare plans to confront the crisis in all its forms, and a parliament that monitors the performance of the executive branch, which Iraq is missing at the moment.
[5] https://www.fxnewstoday.ae/commodities/brent-oil-analysis
