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An Economist to NINA: Saudi Arabia and Russia deal a fatal blow to the Iraqi oil-dependent economy

Baghdad, A specialist in the management of state institutions in crises – in Harvard University, Ali Jabbar Al-Faraiji, confirmed that Saudi Arabia and Russia are dealing a fatal blow to the Iraqi economy through the oil market.

Al-Faraiji said in a statement to the Iraqi National News Agency (NINA) that Iraq will receive the largest economic shock by virtue of adopting the federal budget on global oil prices as a basis and a near-single resource, and in 2020 it will be very difficult to face a dilapidated budget with operating expenses rates that constitute approximately 78% of the public budget, "he said, noting:" The Corona virus crisis and the failure of talks between Saudi Arabia and Russia on reducing oil production pushed the world oil prices to a crash and decreased them to 32 dollars. "

He pointed out that "the total resources of Iraq from oil production did not exceed $ 220 billion annually at rates of hesitant growth between (negative - 1.67% in 2018) to rates of 2.1% for recent years, and it suffers from failures in public spending that constitutes more than 44% and at an average of deficit equal to 7-10% of the total GDP, which is a catastrophe if we compare this rate with international standards that should not exceed 3% in the most extreme cases. "

He added: "By reading the operational budget, we find that the high rates of what constitutes the wage bill and salaries that occupied a percentage in the 2018 budget are more than 59% of the total government spending, expected to rise in 2020 to 68% of the total government spending due to the additional appointments witnessed in 2019 which amounted to nearly half a million employees (conceived unemployment) .

Al-Faraiji stressed "directing the exchange process to the public budget (not approved yet - the second quarter of 2020) to include the rationalization of spending very sharply and start the process of recovering the money that was stolen in the years since 2005, and this will require swift and firm measures adopting a specialized judicial system and by the power of law.

Al-Faraiji called for "encouraging small projects producing with loans programmed with pre-prepared (feasibility studies) prepared in advance, and the young energies that can work on these projects and successful loan investment - instead of the previous behavior of loans (commercial, industrial, housing)" are selected, indicating that these emergency economic procedures with a strategy that differs from the previous one, its success will be conditional on changing and reorganizing the top management of institutions and Ministries, and even the current (and prospective) Prime Minister’s team if it is named and voted on.

Source: National Iraqi News Agency

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