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Al-Kazemi puts the building blocks of a sovereign wealth fund to ensure the future of generations after the completion of Kuwait's compensation

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2021/03/09 13:45    Readings: 2000    Section: File and Analysis


Al-Kazemi puts the building blocks of a sovereign wealth fund to ensure the future of generations after the completion of Kuwait's compensation

Baghdad / The Obelisk: The financial advisor to the Prime Minister, Mazhar Muhammad Salih, revealed, on Tuesday 2 March 2021, positive proposals for the establishment of a sovereign wealth fund in which funds equivalent to their deductions are deposited for the current compensation for the Kuwait war, in line with the reform white paper, indicating in another aspect that the price difference A barrel of oil in the budget goes to fill the deficit, and the government does not need to borrow, indicating that the development of a supplementary budget remains according to the government's need.

Salih told Al-Masalla: We have positive ideas and proposals for the establishment of an Iraqi sovereign wealth fund, in which amounts equivalent to the compensation of the Kuwait war are deposited after the payment of these compensation is completed in the coming months, and it is managed along the lines of the generational funds, which is considered a sovereign investment resource for Iraq, and in line with The white paper launched by the government to strengthen and reform the structure of the Iraqi economy.

Saleh indicated that only an amount of less than $2.5 billion of the $52 billion out of $52 billion remains of the Kuwait war compensation until the moment, as 3% of the proceeds of every barrel of Iraqi crude oil exported is still being deducted, through a mechanism and a bank account that is handled by the Reserve Bank. Federal Council in New York, according to subsequent Security Council Resolution 1483 in May 2003.

He pointed out that the deductions are currently paid through the United Nations Compensation Fund {UNCC}, expecting that all the remaining compensation will end within a year or a little more, depending on the evolution of oil prices and the returns of a barrel of Iraqi oil exported.

It is noteworthy that the United Nations Compensation Committee was formed in 1991, the same year in which the US-led coalition removed Iraqi forces from Kuwait, and mandated the commission to pay $52.4 billion (46.8 billion euros) to Kuwaiti individuals, companies, government agencies and other organizations that suffered losses.

Because of the Saddam regime's invasion of Kuwait, the compensation money comes from a tax levied on sales of Iraqi oil and its products.

The economic advisor to the Prime Minister said that the budget was built on a deficit, meaning that the expenditures are more, and there can be borrowing, but the difference in the price of a barrel of oil today is filling the deficit, so there is no need for borrowing, that is, the surplus replaces borrowings.

He added that this difference in the price of a barrel of oil closes the budget deficit, and the government may not need to borrow, noting that this does not mean that there is no final borrowing, but the difference is compensated, and there may be a surplus, and this depends on the stability of oil prices.

And on the existence of a complementary budget, Saleh indicated that creating a supplementary budget is not necessary, but it remains according to the government's need and the extent of the revenue strength, and does it have important projects that are deferred that need a supplementary budget.

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