What is the relationship of the conditions of the International Monetary Fund with the demonstrations in Iraq? The bad lock tempts the thief

2018/7/21 02:54:59 PM

After the government failure to manage the economic file, which caused a large budget deficit, the government had to resort to the International Monetary Fund after two years of talks to fill the budget deficit, until the budget of 2018 austerity measures and conditions of the IMF.

The demonstrators, who started sparking their demonstrations from Basra, Prime Minister, Haider Abadi, to provide employment opportunities after the unemployment rate rose to 40%, to Abadi immediately issue a decision that includes the release of 10,000 degrees of functional and financial allocations from the emergency reserve for Basra, and now headed to implement under his supervision And follow-up three years after the cessation of appointments that was within the terms of the agreement with the International Monetary Fund.

The terms "humiliating" as described by economists, took advantage of the difficult financial situation of the country, in light of the decline of oil revenues at the time, especially as it imposed international financial control on the government program of economic reform, at a time when Iraq was in war with a terrorist organization, An unknown fate of his children and his grandchildren in the future is the lack of appointments or lack thereof to the case of demonstrations and angry protests sweeping ten provinces.

This agreement was not the first, it was preceded by two agreements: one in 2005, concerning the settlement of Iraq's obligations with creditors under the Paris Club, and the other in 2008, to address the consequences of the significant decline in oil prices at the time.

Conditions of the International Monetary Fund on Iraq

After the International Monetary Fund agreed in May 2016 to lend Iraq $ 13 billion to meet its financial needs over a period of 10 years, at a rate of 1.5%, impose a set of conditions for the Iraqi government to implement in the budgets of the next state, until the repayment of the loan.

1 - The Iraqi government to take measures to reduce expenditures in the state budget for fiscal year 2016.

At the time, the government suspended appointments for three years, with the exception of health, education and security ministries, in addition to reducing the budget of 2018 by 13 billion dollars, as well as imposing strict taxes on goods sold in commercial centers and malls and men's and women's barbershops, and improving the level of banking supervision to combat corruption and money laundering .

2 - Take measures to settle the receivables of oil companies, and not allow accumulation.

3 - subjecting the full salary and allowances to senior civil servants, and senior and special grades, to income tax. This tax varies according to the different income segments, ranging from 7.5% to 15% of the total salary and allowances. The minimum working grades are subject to an income tax on the nominal salary only,

4. Rehabilitation or "restructuring" of self-financed public companies.

5 - To work hard to raise the efficiency of the performance of the financial and supervisory organs in the country, and at all levels, and to strictly control the doors of the disposal of this loan.

6. Develop alternative financial resources for oil, reduce expenditures and operate state-owned enterprises.

The value of the 2018 budget has reached 77.5 billion dollars, with a deficit of 11 billion dollars, while reducing the proportion of Kurdistan region in the budget from 17 percent to 12.6.

The budget relied on the price of selling oil at $ 46 per barrel at a rate of three million and 888 thousand barrels per day, including 250 thousand barrels of oil produced in the Kurdistan region, meaning that oil revenues only per day 178,848,000 per day worth 5 billion and 356 million Dollars.

But after the price of the barrel rose to $ 70, revenues rose to $ 272.160 million, or 8 and a half trillion per month, and the total expenditure is estimated at 108 trillion and 113 million and 913 thousand and 506 dinars, and the situation of the citizen is still unchanged.

A member of the Finance Committee, former MP Magda al-Tamimi says in an interview with (One News) that: "Iraq suffers from the problem of over-reliance on oil revenues, which may reach more than 93%, and 7% or less on non-oil revenues in the budgets of 2005 To 2018. "He pointed out that customs and tax revenues do not go to the state treasury, but go into the pockets of corrupt.

"We need the authority of the law to hold corrupt people accountable and to review all legislation after 2003 that has placed financial burdens on the budget, as well as the removal of privileges and the fair distribution of state resources to the people, as well as the suspension of recourse to loans that cost Iraq future obligations and procedures for our grandchildren," Tamimi said. Failure of financial and monetary management. "This subject is routinely (crime).

She said: "There are laws initiated as a result of emotional reactions to the laws of the former regime, and placed a heavy financial burden on the budget."

And confirms through her talk to (One News) that it is writing a program of monetary reform. Tight it will be a different paper.

"This paper includes practical steps in reforming the fiscal and monetary policy, if applied within six months or a year, which will bring about a clear reflection on society and its welfare, and adopted this paper on the experiences of developed countries." My reform policy is to maximize non-oil resources.

"Most of the members of the government have foreign nationalities and I was hoping to transfer even a small, successful experiment to Iraq, but this issue did not happen," she said.

For his part, the religious authority Sheikh Mohammed Yacoubi called on the government to find immediate solutions to meet the legitimate demands of the demonstrators, stressing the need to develop strategic plans to avoid the occurrence of crises.

This came after he received in his office in Najaf, Jan Kubc, head of the United Nations mission in Iraq.

The religious authority confirmed in a statement: "The closure of the door of employment for nearly three years under the pretext of austerity or career decline or responded This hope could have been kept by filling vacancies due to the movement of owners or the creation of new necessary jobs, especially since the financial crisis has significantly eased after the price of a barrel of oil exceeded $ 70 while the budget is estimated.

At the price of $ 46, as well as the services that the people to improve them are not difficult to provide them even gradually, but the major scourge is corruption leaves no room for any achievement, in addition to the lack of real will to address. "In this regard, a member of the Committee on Economy and Investment, Captain L. (Wan News) that: "Iraq is not supposed to resort to the International Monetary Fund or to any external debt only after the construction of infrastructure, and the construction of economic projects, as well as diversify the resources of the state."

He adds: "The deficit to borrow is a plan that embroiled the economy and burdened Iraq with debt , Especially as the debts of the World Bank include many requirements, including restricting the Iraqi economy restrictions placed in the embarrassment of severe.

"He points out that:" recourse to the IMF is not considered, and there should be funding for strategic projects or infrastructure projects, in addition to diversifying revenues for Bridge the gap in the budget through non-oil revenues. "

"The decision to sign the agreement with the IMF was issued at a time when Iraq was suffering from a severe financial crisis because of the war with the Da'ash. The resort to the IMF was an important issue at the time, even though it weighed heavily," Hamam al-Shamma said. The burden of the Iraqi economy. "

"The state now has surplus because of the difference in oil prices from what is planned in the budget, as well as the end of the war, and can be used by the caretaker government this surplus to meet the loans and meet the demands of the demonstrators."

"The conditions of international criticism may sometimes be right, and sometimes the right is meant to be invalid. In the case of Iraq, the right and wrong came from the successive governments that spent the money illegally, and through which Iraq suffers from accumulated debts and deficits in its budgets."



The problem of fiscal deficits is over

This is confirmed by the economic and financial adviser to the Prime Minister Haider Abadi, the appearance of Mohammed Saleh in a statement that "Iraq exceeded its financial crisis through the financial flows to the budget of 2018 achieved by high oil prices in world markets, which amounted to $ 64 per barrel."

He pointed out that "the problems of deficit, borrowing and borrowing have become the past because of high oil prices," pointing out that "the situation has become more comfortable compared to the past months, which gave the government the strength to overcome its financial crisis suffocating."

He stressed that "the implementation of some of the needs became more flexible than the past years by the financial flow in oil exports," noting: "If the parliament exists, the government sent a supplementary budget includes high oil prices for approval."

It shows that "the surplus achieved in the current budget can not be manipulated, because it is not guaranteed in the draft budget law will be recycled in the next budget on the grounds that the parliament ended its current session can not send a supplementary budget for approval.

He continued that "in the event of a new parliament during the next two months can be sent the supplementary budget law for approval so that the new government to spend money on some projects due and stalled."

He added that "there are funds owed to the Iraqi government as salaries to employees and retirees and social welfare and the payment of debt and investment project expenses amounting to monthly to seven or six trillion dinars," stressing that "these amounts will be cut from the monthly oil sales of up to 9 trillion," indicating That "the remaining of these amounts will be carried forward to the coming months."

As for debts owed by the Iraqi government, he says that "one third of Iraq's debt is subject to the debts of the Paris Club, which has not been settled," noting that "these debts are mostly sovereign debt belonging to some countries of the Arabian Gulf."

The parliamentary finance committee, revealed last year that the volume of Iraq's internal and external loans amounted to 123 billion dollars, criticizing the policy of borrowing by the government, and called for austerity policy.

It is noteworthy that Iraq, as a result of the difficult financial conditions experienced by, previously sought to agree with 22 international and local institutions to borrow from them to fill the federal budget deficit of 13 trillion dinars, while waiting for benefits estimated at 8 trillion are payable. The government resorted to borrowing from banks, internal and external In the past years to pay for the war on Dahesh, which accompanied the liberalization of a significant drop in world oil prices, forcing the government to resort to foreign loans.

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