November 2, 2015
After a sharp fall in oil prices, revenues generated fallen Iraqi budget this year strongly than had been planned to cover expenses by $ 150 billion. He received this decline in revenue at a time when the army occupied the Islamic caliphate (Daash), part of northern and western Iraq estimated one-third of the area, and the army mobilized to fight crowds popular. When the budget was not prepared to put up a large military spending, but prepared a counterbalance unusual circumstances. In light of the financial and military conditions emerging, the government revised its operating and investment expenses to keep the paragraphs where necessary. Stopped the implementation of some investment projects and postpone the start the other interconnected. However, the problem still exists under increasing military spending imposes a priority and displaced large numbers in need of emergency relief, and high-paying pensions and allowances in exchange for oil resources have decreased a lot and grinds Ptnaqsa more in the future. As global oil market continues to suffer a glut in supply and weakness in demand because of the slowdown in the pace of global economic recovery.
At the time the government began issuing domestic bonds and borrowing from international institutions and withdrawals from reserves of the Central Bank, stopped its offering Iraqi treasury bonds in the international market worth $ 6 billion because foreign investors demand very high returns, arguing that the seriousness of the security situation and the war against «Daash». Also it resorted to raising the sales tax in the southern ports of 3 to 15 percent. And there is talk that the government, or at least their quest, to mortgage the Basrah oil companies in exchange for urgent resources. Is the government exhausted all appropriate action to address the gap between revenues and expenditures in light of the scarcity of oil revenues security and military conditions imposed priority?
Known in the economic literature and experiences of many countries, that the management of the economy in conditions of war differ with him in peace conditions. This is what happened in the most liberal economies of countries like the United States. Any attempt to overlook this fact or violation would be at the expense of the country's economy and the interests of his people. So the Iraqi government not to deviate by its own conduct about it and dealing in serious form with declining resources and increasing military spending and the adoption of a war economy by taking the following steps:
- The Central Bank is in cooperation with the ministries concerned, the balance of foreign exchange (foreign currency) which identifies sources of foreign exchange earnings and the sources of demand and to balance them.
- in the light of the budget preparation above and implementation of the cessation of daily currency auctions.
- restricts the import licenses issued by the Ministry of Commerce and is performed to open letters of credit, as is customary in other countries, and not to pay cash advance as is currently happening. And it is necessary to import non-stop and is eliminated through currency smuggling and import forged documents.
- Stop the current gold import quantities and in which amounts, according to official sources, about 70 tons per year. The import of gold to these quantities, while about a quarter of the Iraqi people under the poverty line, do not benefit from it only involved the looting of public money and the owners of the astronomical salaries.
- The Central Bank has stopped gold and sell alloy version to the public and banks.
- The Central Bank has stopped providing loans to private banks for lending to projects small and medium futility that in such circumstances and the likelihood of abuse. And private banks can fund it from their funds.
- Stop to invite regional and international parties to conferences aimed at the reconstruction of Iraq at the present time. There is no reconstruction can be achieved when the country is in a state of war and the security situation is disciplined. Even if Some parties willing to participate in such an operation would be too high a cost.
- Continue offering treasury bonds in the Iraqi market.
- Pay part of the senior salaries of state employees in the form of treasury bonds.
- Will be forced Iraq, in spite of these measures, to borrow from abroad including payment on credit, especially if the price of a barrel of oil fell to below $ 35 as expected some international circles.
- postponement of Law No. 21 of 2008 and the judge to transfer the powers of the ministries to the provinces to the inadequacy of the conditions for it, and because most of the provinces is under the control of the parties or blocks political may account for these resources.
- centralized investigation into financial and monetary decisions to become confined to the Ministry of money and the central bank to tighten oversight and accountability.
If the government has kept the case as it is now, do not be surprised for a complete breakdown of the Iraqi economy if continued oil revenues decline.
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