On Monday, the Iraqi parliament approved the country’s budget for 2023, amounting to 198.9 trillion dinars ($153 billion), which includes record spending on a growing government wage bill, development projects aimed at improving services, and rebuilding infrastructure destroyed by neglect and war, according to the report. Iraqi media reports indicated that Iraq’s budget deficit reached a record level of 64.36 trillion dinars.
Iraq’s budget expected that oil would be traded during 2023 at $70 a barrel, and it expected Iraq to export 3.5 million barrels per day, of which 400,000 barrels were from the Kurdistan region.
Article 14 of the budget, which is related to the Kurdistan region’s share of the budget, has caused disputes between the parliamentary blocs, as this article relates to oil revenues in the Kurdistan region, and its audit by the Federal Audit Bureau.
A large budget deficit
The international economic and energy advisor, Amer Al-Shobaki, confirms, in his interview with “Sky News Arabia Economy”, that the new Iraqi budget includes basic improvements in infrastructure and social development in the country, but at the same time he sees “that this budget has incurred Iraq’s deficit, which is the largest of its kind since For many years, which doubles the debt on the government, and adds more burdens of debt service, in terms of interest and installments on the upcoming budgets, and the deficit is estimated to be almost twice the deficit of the past budget, about 25 percent of the total budget size, to reach about $40 billion.
Al-Shobaki explains that “the budget deficit mainly comes from additional spending on salaries and wages for the public sector, and it is likely that the government will add about 500,000 jobs to the public sector, which will expand its obligations to pay salaries and add new burdens to it, considering that a weakness in the budget that adopted the exchange rate.” At a rate of 1,300 dinars per dollar, and an oil price of $70 per barrel, and any improvement in the oil price will reduce the government budget deficit, and the Iraqi government should have instead of depleting the budget by paying the salaries of public sector employees, supporting greater participation of the private sector in development, and alleviating burdens on the budget.”
Development begins with projects related to infrastructure, including the electrical network, especially electrical interconnection projects with the countries of the Gulf Cooperation Council, where 220 million dollars have been allocated for this connection with a capacity of 500 megawatts, and there is a connection with Jordan at a cost of 140 million dollars, which helps to provide electricity to a larger number of people. Citizens, according to Shobaki.
Baghdad dispute and Kurdistan
With regard to ending the dispute between the Iraqi government and Kurdistan, the international economic and energy advisor, Al-Shobaki, adds, “After the Paris Court for Economic Disputes approved the agreement that obligated Turkey to stop oil exports from Kurdistan, it was agreed with the Iraqi government to place the revenues from selling oil from Kurdistan in the central bank in Baghdad.” , so that the federal government is supervising the spending of this amount on the autonomous region, but so far Turkey has not allowed the restoration of exports through the port of Ceyhan, as Turkey was asked last May to resume exporting oil through the central government, so that the revenues are placed with the central government Exports are likely to resume at the end of June.
In turn, the economist, Hussein Al-Qamzi, said in his interview with the “Sky News Arabia Economy” website, “The budget explains in detail how the government will spend money on the salaries of public employees and improving infrastructure and services. It is a huge budget and the fiscal deficit is estimated at 64.36 trillion dinars, which means that The government will spend more than it has, and this will double the deficit from last year, and the government expects that oil revenues will be large, but there is no alternative plan if oil prices fall, and this is very likely in light of the availability of cheap Russian oil in the market, only there is an assumption based on One component is an increase in oil prices, but if prices fall, Iraq may have to borrow more money to maintain its spending.
Al-Qamzi describes the increase in the number of employees, according to the budget, by more than half a million new employees in the public sector, as a disaster, noting that “Iraq is already suffering from a glut due to the number of current employees in the public sector, as the wages and benefits of these additional workers will exceed 58 billion dollars, thus expanding the salary bill.” The public deficit and financial pressure will increase, and Iraq is not doing anything to reduce its dependence on oil.
Ending the dispute between the Iraqi government and Kurdistan over oil gave Baghdad additional authority over Kurdistan’s oil income, by depositing it in a bank account belonging to the federal government, and then paying the Kurdistan government’s share to it, but Kurdistan’s oil exports have not resumed to Turkish ports so far, although Although Iraq asked Turkey to do so last May, according to Al-Qamzi, an economist.
Employment opportunities and unemployment
Economist Ali Hamoudi says in his statement to “Sky News Arabia Economy” website, “This budget is the largest in the country’s history, and there is hope among the Iraqi people that the budget aims to create tens of thousands of job opportunities in the public sector. As the country that has suffered From decades of war and sectarian strife in the aftermath of the US military invasion in 2003, you want to improve services and rebuild war-damaged facilities.”
“Iraq is one of the fastest growing populations in the world, and it is expected to double from 43 million to about 80 million by 2050, while most of the economy is state-led, with high unemployment as the country witnesses frequent protests over the lack of jobs and public services,” Hamoudi adds. “.
For his part, the economist and member of the Board of Trustees of the Middle East Center for Economic Studies, Hashim Akl, notes that the main issue facing the budget is the lack of infrastructure, and the negligence in developing and improving it, especially electricity, as Iraq suffers from an electric deficit estimated at 50 percent, of the actual need. This prompted electrical interconnection projects with Jordan, Turkey and the joint Gulf line, in addition to another problem, which is the burning of gas associated with oil production, forcing Iraq to import gas from Iran, and this is another burden on the budget, as imports reach $4 billion.
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