Baghdad – IA
Photography: Hussein Al-Wanan
Finance Minister Ali Allawi announced that the white paper focused on introducing the principle of economic pricing and streamlining expenditures, and while he indicated ensuring commitment to paying employees’ salaries on time, he confirmed submitting proposals on the amendments made to the 2021 budget.
Allawi said in an interview with the (INA): “Iraq went through a stifling financial crisis, as state revenues in 2020 became the lowest since 2014,” indicating that “the white paper began not only to rationalize expenditures, but also focused on the known sources that require reform and change.” Fundamentally and to streamline expenditures, the principle of economic pricing was introduced because the main inputs are subsidized, and these reflect the revenues from oil input pricing to distribution companies and refinery companies.”
He added, “Iraq has begun to build the base and develop it in the future in order to reduce our dependence on oil revenues,” noting that “the ministry is trying to solve problems that have accumulated for decades and cannot be neglected without addressing the joints affected by these wrong policies, as this requires a large package of reforms.” .
Allawi continued, “We cannot proceed with economic development and put Iraq on a new economic path without addressing the problems,” explaining that “the white paper focused on addressing 600 measures, occurring in 60 specific packages over a period of 3 to 5 years, and applied to all major aspects of the state from Ministries to bodies, which require diligent and continuous work.
He pointed out that “it is not possible to reform a specific thing without knowing its impact on other sectors. It is a complex network and the method of dismantling it on a regular basis requires specific timings.”
Obstacles to implementing some items of the reform paper
Allawi stressed, “There are obstacles to carrying out reform because every reform will affect and be affected by certain parties,” noting that “despite our conviction as a state and as a people of the necessity of reform and putting Iraq on the right track, without total dependence on petroleum products, this requires that we face difficulties and provide solutions that cannot be achieved.” “It greatly affects the vulnerable classes.”
He continued, “These measures will face reactions and perhaps resistance. For example, we cannot avoid the necessity of automating all government institutions,” pointing out that “in light of the 21st century, Iraq cannot remain behind, and the philosophy and policy of the private sector cannot be adopted and supported if the obstacles are not removed.” present in each of the joints, which must be dismantled in a scientific and objective manner and which can affect the short stage, but in the medium and long term, they are all necessary.”
Budget adjustments
Allawi continued, “Until now, we do not know the final form of the general budget for the year 2021, which has not been presented to a vote yet,” pointing out that “according to our communications, the budget items have not changed much, especially after the agreement we reached with the Finance Committee in the House of Representatives, as… The reforms and changes that the committee requested include including a large portion of contracts in the budget that does not exist.”
Allawi confirmed, “With regard to the deficit, it has fallen to about 30 trillion dinars,” explaining that “this is within the capabilities of the government, which is financed locally and externally without affecting public debts and without affecting the ceilings.”
The final price of a barrel of oil in the budget
Allawi continued, “With regard to the price of oil, when the government presented the budget, the price of a barrel of oil was 42 dollars. It has now changed, reaching 45 dollars, and this price is very reasonable and final,” adding that “the indicators indicate that the price will be relatively conservative, as the real revenues will be more, because they give us A kind of flexibility to transfer resources to points where there was a scarcity.”
Allawi stated that “the Ministry has basic projects that have been developed, especially in supporting the poor and supporting the treatment of Corona and social welfare, but there are other detailed issues, but in general, they are reductions introduced by the House of Representatives to the budget, which will be presented in an acceptable manner,” noting that “the main reductions are how to address Delays. The Ministry has arrears that must be met, but the Finance Committee in the House of Representatives decided to postpone and move them over periods of time. Likewise, with regard to internal debts, these items I do not consider to be a fundamental disagreement, but rather a procedural disagreement.”
income tax
Allawi stressed, “We expect the House of Representatives to set an income tax on all salaries and all allocations, and we have no problems. This is another way. This will lead to a reduction in expected revenues, but in light of the circumstances we are going through, this change is reasonable, meaning within reasonable limits.”
Allawi continued, “The Finance Committee did not give us the draft budget, but rather ideas, some proposals, and points on which the discussion takes place,” explaining that “The budget that is now before the House of Representatives, we presented it as a government, as amendments that will be made taking the viewpoint of the Finance Committee’s position and also the additional positions that we presented as a ministry.” “Financial”.
Allawi stated that “the budget was presented by the government and is now before the House of Representatives, and the Finance Committee had some amendments, but these amendments must be presented to the representatives as a whole in order to be voted on,” noting that “what reached us were draft amendments and not a budget, and we discussed them with the Finance Committee in a comprehensive manner.” “Friendly, in a good atmosphere.”
Dollar exchange
Allawi pointed out that “the dollar exchange rate is a government decision linked between the Ministry of Finance and the Central Bank,” explaining that “this price that we reached after months of study and months of discussions and even controversy with local and international parties. This price is very important and cannot be changed on a daily basis.” Desire.”
He continued, “The exchange rate came according to our indicators and studies in discussion with the Central Bank, the International Monetary Fund, and other Iraqi parties, including the heads of the blocs and the House of Representatives,” considering that “this price is reasonable and there is a great response regarding the impact on government revenues and controlling the auction process, as the reserve increased.” At the Central Bank, after we were facing the possibility of a major crisis regarding the exchange, meaning the foreign currency is available at the Central Bank, and we did not change the marketing process.”
He added, “The markets have accepted the current exchange rate, and in the coming years it will give incentives to the private sector, stop the import rate, and strengthen the reserve.”
He stressed that “there are parties that benefited from the change in the exchange rate and others were harmed, and the government is trying to reduce the damage, especially the contractors who contracted with the state in dinars, and there are also contractors who contract in dollars, and perhaps they price in dollars and nominally offer in dinars, so there must be some kind of balance.”
Salary distribution
Allawi stated that “the beginning of this month, the financial influx from the increase in the price of oil will return us to the stability of salaries in terms of timing,” stressing that “we are forced in advance, there are no options, and there is no trick in hand.”
Allawi expected that “during the current month of March, salaries will be distributed according to timing and incoming shipments.”
Financial management law
Allawi added: “I spoke previously about the necessity of amending the financial management law because 1 out of 12 cannot be a rule for managing the country’s finances, especially a country like Iraq in light of crises,” pointing out that “between the 2019 and 2020 budgets, there was a 50% decline in revenues. It is not possible to adhere to this method, but there are other ways, which are giving the Council of Ministers the right to manage the state’s finances according to certain controls.”
Delayed vote on the budget
Allawi stated that “there are no technical issues that hinder voting on the budget, but rather regarding the region’s share,” stressing that “the ministry requests that it be given a financial budget approved and approved by Parliament to know the final road map for the country.”
The minister stated that “the only proposal that exists now is the government’s position, which we estimated in the budget and presented to the House of Representatives,” noting that “the negotiations that take place in the finances are not a party to them.”
External debt
Allawi continued, “Iraq is committed to repaying foreign debts on time,” explaining that “Iraq is not in much debt, like some parties, but rather that foreign debts relative to the size of the economy are reasonable.”
Allawi stressed that “foreign debts amount to 60 billion dollars distributed over the years and the way they are arranged,” noting that “Iraq’s debts are mostly owed to governments and international institutions, not to companies or commercial institutions, so their cost is relatively good and the repayment periods are relatively long.”
He pointed out that “most of the external debt is linked to projects, and there is only debt from the IMF for the purpose of assisting and supporting the budget, but this has been paid,” explaining that “Iraq does not need monetary financial support. Perhaps for certain periods we need monetary support for the budget, so international parties can help.” Iraq is in the process of completing a reform project, but in general, Iraq borrows from abroad for the purpose of financing projects, which, if they are successful, are repaid through its revenues.”
He pointed out that “most of the internal debts are in the hands of government institutions such as banks and the central bank, so they can be rescheduled,” noting that “the internal debts amount to 70 trillion dinars and are being repaid.”
Allawi pointed out that “the budget includes all issues related to deletion and creation, and the decision remains with the House of Representatives,” pointing out that “lecturers, doctors, martyrs’ families, and other similar matters were included in the budget,” indicating that “the country is going through a financial crisis and that the House of Representatives decided that these issues should be scheduled.” Implications.
He stressed that “Iraq has an obligation according to the licensing contracts, and there are arrears that should have been cleared and were supposed to be paid, and some arrears must be returned so that the state is responsible.”