Prices are not guaranteed.. “Iraq” has enormous wealth and extreme poverty, and economists are identifying alternatives to overcome the financial crisis
390 Economie 2022/02/22 18:54
Baghdad today - Report: Mahmoud Al-Mufraji Al-Husseini
When we listen to the conversations of economic experts, we are pained by the state of the country, which is one of the richest countries in the world, but its people are among the poorest on earth, due to the failure to exploit its wealth for the benefit of its people, as well as the corruption that has spread in the country, and its wealth is obscenely squandered.
Economic analysts expect that the rise in oil in global markets will positively affect the federal budget for the current year, provided that the next government takes advantage of this rise.
Oil prices touched their highest level in seven years, amid fears of supply disruptions and a war between Ukraine and Russia .
This week, analysts suggested that crude oil prices would exceed $100 per barrel due to the strength of global demand, pointing to a possible war between Russia and Ukraine as one of their main concerns for the markets in 2022 .
Three analysts told the Reuters Global Markets Forum that oil prices will rise if global supplies are disrupted, as well as with the recovery in demand due to the escalation of natural gas prices in Europe and Asia, as well as the resumption of activities after the closures imposed to limit the spread of the Covid-19 pandemic.
"The biggest geopolitical risk is Ukraine. The trend is looking good overall for commodities," said John Vail, chief global strategist at Nikko Asset Management in Tokyo.
Millions of Iraqis are still languishing below the poverty line, despite the enormous wealth that Iraq enjoys, which could place it in the ranks of the richest countries in the world.
Iraq is ranked ninth in the world in natural resources, as it contains about 11% of the world's oil reserves, and 9% of phosphates, as well as other precious resources.
Although Iraq possesses the third reserves in the world.. Know about the Al-Mishraq sulfur fields in Iraq,
but its wealth is a waste,
and it has not been invested due to corruption and years of wars and political conflicts, amid calls for activating the exploitation of resources and reviving the Iraqi economy.
The poverty rate in Iraq is about 24.8%, according to a study conducted by the ministry last year in cooperation with the World Bank, and this means that about 10 million Iraqis live below the poverty line.
Poverty rates top the Muthanna governorate with 52%, followed by Al-Diwaniyah with 49%, and Dhi Qar with 48%, then the rest of the governorates come successively at different rates, while the poverty rate reached 40% as a general average in the governorates of Anbar, Salah al-Din and Nineveh, as they were affected by the conditions of the war on ISIS terrorist organization, and the resulting displacement and devastation.
The poverty rate in the capital, Baghdad, reached 13%, and in the Kurdistan region 12.5%, while in the central governorates, the poverty rate reached 18%, and Karbala and Najaf were the most affected by the repercussions of the Corona pandemic due to their great dependence on religious tourism.
Iraq is one of the major countries in the production and export of oil, representing 90 percent of the budget resources, but this large oil country has been suffering from major crises and high rates of poverty and unemployment since the US occupation in 2003.
The Iraqi economist, Abdul Rahman Al-Mashhadani, says that any rise in global oil prices will have a positive impact on the revenues of the general budget, as there are expectations that oil pricing in the 2022 budget, if approved, will be between 55-65 dollars per barrel.
He added, "The budget may not be approved, and the government will continue to work with the Financial Management and Public Debt Management Law No. 6 of 2013."
He added, "There could be financial surpluses in the coming months as a result of the rise in oil prices, which could include the next fiscal year 2023."
Al-Mashhadani pointed out that "Iraq, with regard to the fluctuation of oil prices, is different from the rest of the oil countries.
So far, a sovereign fund has not been established in the country, as this fund has been talked about since 2012, but it has not been officially approved, as those calls have recently been raised." Which demanded the establishment of a sovereign fund under any name, in order to keep the achieved financial benefits, or to allocate to it the 3 percent that was earmarked for Kuwait’s compensation.
For his part, the economist, Dergham Muhammad Ali, put a proposed price for the 2022 budget, according to oil prices.
Muhammad Ali told (Baghdad Today), "The price of a barrel of oil proposed in the budget should be between 50 and 55 dollars per barrel, because prices are not guaranteed and in order not to have negative shocks to the budget."
He stressed the need to "maintain pessimistic estimates of oil prices, and if prices stabilize at their current levels, they will fill the estimated deficit in the budget without the need to borrow."
And he expressed the possibility of "drafting a supplementary budget for the implementation of investment projects in the last quarter of the year if there is a cash surplus."