Baghdad, (Business News Report)|| Iraq’s budget is in surplus this year, supported by the rise in oil prices, at a time when the budget deficit has been blown over the past years, especially during the Coronavirus pandemic.
Ali Allawi, the Iraqi Minister of Finance, said that the economic policies pursued by Iraq about two years ago led to the financial abundance in Iraq’s budget.
Allawi touched on the OPEC agreement, stressing that it restored the balance between supply and demand in the oil market after its collapse following the emergence of COVID-19, which led to the stability and recovery of oil prices.
He explained that OPEC’s call to cut oil production by 9.7 million barrels per day served Iraq’s budget.
Allawi pointed out that Iraq’s commitment to the cuts “played a major role in ensuring the success of the OPEC agreement and the rise in oil prices,” suggesting that “the new world order after the Ukraine war will lead to the continued rise in oil prices.”
“The depreciation of the Iraqi dinar against the US dollar in December 2020 led to an increase in oil export revenues by 23%,” he said, adding that these high revenues “will provide the government with the financial space to protect citizens from the effects of high food prices.”
He added, “The continuation of the Ministry of Finance’s sales in US dollars reflects the increase in oil revenues, the provision of goods and services to citizens, and thus the increase in foreign currency reserves with the Central Bank.”
Allawi pointed out that “the recovery in oil prices and financial management helped the reserves to become $70 billion by last April.”
The continuation of this would lead to an increase in reserves to “more than $90 billion by the end of 2022,” which he considered a “record level for Iraq,” Allawi said.
The Iraqi Minister of Finance stressed that “there is stability and reliability in the Iraqi market and for the Iraqis, which removes the profit margin for the currency market’s exploiters.”
As for economic activity, he saw that “the meeting of liquidity pumping factors starting in the middle of 2020 led to a significant increase in the amount of money circulating in the economy, the recovery of activities and the growth of non-oil GDP.”
He predicted that this growth would continue in 2022, “to increase by an estimated 5%.”
Regarding the rise in food prices in Iraq, he said that the prices of materials “rose at much lower rates compared to international food prices,” noting that the World Food Program “monitors two food baskets for Iraq.”
In his presentation attached to the graphic equations, he explained that “inflation in Iraq is lower than what is witnessed by the emerging economies and the group of oil-exporting countries in the Middle East and North Africa.”