The Iraqi government are counting on the improvement of oil prices to improve their budget, which suffers from a large deficit, while the prices exceed the level of $70 per barrel.
The authorities are continuing the austerity measures they imposed this year, but the rampant corruption in the country stands in the way of positive results.
To combat the deficit, Iraq had previously devalued the local currency by 1,450 dinars to the dollar, after it had been fixed for years at the threshold of 1,200 dinars to the dollar.
However, in contradiction to the government’s narrative, the Committee on Economy and Investment of the Iraqi parliament confirmed that the deficit no longer exists given the high price of oil, and the increase in export quantities.
Committee member Atwan Al-Atwani said that talking about a deficit should be based on numerical data, stressing in an interview with Al-Araby Al-Jadeed that the price difference is large between the figure on which the budget is built and the current price of a barrel.
He pointed out that the quantities of oil exported by Iraq also increased through bilateral agreements with several countries. In contrast, there is no significant financial spending due to the suspension of many projects, he added.
He continued, “There is a large financial accumulation that is sufficient to bridge the deficit in the budget, and this can fill the funding shortfall in important sectors.”
Al-Atwani stressed that “there is no justification to talk about the deficit, because the oil price difference is enough to bridge it.” He noted that most ministries have not implemented their plans this year, which means that revenues have increased and expenditures have declined, which is an ideal equation to reduce the deficit.
He stressed that the Iraqi authorities can fill the budget deficit without the need to borrow.
Benefiting from recovery
Meanwhile, member of the Committee Mithaq al-Khalidi confirmed, last week, that the Ministry of Finance could have benefited from the recovery of oil prices in order to confront the lack of economic resources.
She expressed her astonishment at the Finance Ministry’s resort to borrowing, indicating that the government’s attempt to borrow will not pass easily in Parliament.
She continued, “The issue of loans remains just a government proposal that did not gain the confidence of Parliament.” The loans will not be passed in the presence of alternatives to that, she said.
In turn, an official in the Iraqi Ministry of Finance said that Iraq has actually canceled the external and internal borrowing plans that were scheduled in the budget items for the current year, which amount to $12 billion and there is no longer a need to borrow.