D. Ali Abdulrahim al-Aboudi: A researcher in political economy
The approval of the budget for three consecutive years represents a new advantage, a gesture that can rid the Government of the problem of not approving budgets. Moreover, the Budget Act explicitly applies to the Government’s program. It also contains more detail than its previous counterparts.
Speculative budget expenditure was overestimated, this will overshadow the rise in the price level, as well as an increase in the area of borrowing, which is supposed to be minimal.
Fixing the price of a barrel at $70 for three years carries the risk of exposure to shocks in oil prices. There are no indications that oil prices will remain at this level for the next three years. Therefore, a decrease of $1 from the fixed price would mean a loss of $1.3 billion, which means IQD 1.6 trillion.
The budget has been prepared in a format that strengthens Iraq’s welfare economy and harnesses a large portion of government revenue to operational expenditures, reflecting the philosophy of borrowing to complete investment projects.
The stabilization of operating expenses represents a departure from Federal Financial Management Act No. (6) of 2019.
The central bank will need to sell about $250 million a day, To meet the government’s spending needs in Iraqi dinars, which would lead to one of two possibilities: either squeeze the size of the government’s reserves or have to increase the supply of domestic cash.
For the next three years, Iraq will be unable to take serious steps toward implementing the program budget, because the current legal framework for the budget “balancing items” would have to be implemented for the next three years.
In the budget, we find that there is a paragraph excluding the planned deficit ratio, contrary to what is stipulated in the Financial Management Act, which stipulates that “the planned deficit in the budget may not exceed 3% of GDP,” whereas the planned deficit estimated in the current draft budget is about 17% of Iraq’s GDP.
Some of the estimated figures are unclear and difficult to read correctly, for example in the Japan International Cooperation Agency (JICA) soft loans paragraph (JICA), which is financed by an amount of (1299,2) distributed in a table, and this number is not clear, and it is difficult to read, either it becomes like this according to typographical error, and the original is ($12,992) million, or the origin of the comma is a point, and the correct figure is ($1,299.2) million. Nor was the Iraqi currency identified as a basis, but we found a basket of currencies not close to the Iraqi dinar.
The following paragraph could be included in the budget: “In the event of a decrease in revenues; Due to the low price of a barrel of oil exported below the budget rate for the 2023 fiscal year, the gap is financed through the same sources of borrowing as shown in the table established in point (II) of Article 2, with an increase not exceeding (5%) above the volume of borrowing confirmed. “
The following paragraph may be inserted: “Article () When necessary, based on actual expenditure and income achieved at the end of FY2023, operating expenses shall be increased by no more than (10%), and investment expenditures shall be increased by no more than (10%) of the volume of actual public revenues achieved at the end of 2023.”