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2015 budget: the financial challenges and opportunities for economic reform
January 2015 19:36
Adnan al-Janabi and Louay Khatib * **
On 12/25/2014 at the special meeting of the Council of Representatives of Iraq, has for the first reading of the 2015 budget as presented by the Council of Ministers, which approved the previous day. Under the project, "the general budget of the Federal Republic of Iraq for the financial year / 2015" Code provides that the total revenue (99.
trillion Iraqi dinars composed of (84.3) trillion Iraqi dinars export revenues (3.3) million barrels of oil per day at a price Default of 60 dollars per barrel, and (15.5) trillion Iraqi dinars as income from non-oil.
The total allocations amounts (125.2) trillion Iraqi dinars, of which (45.2) trillion dinars investment mostly ongoing projects, and about 80 trillion current expenditure (operational).
Thus, the deficit (23.4) trillion Iraqi dinars, after deducting the amount of "national savings for state employees," which was estimated at $ 2 trillion Iraqi dinars from the deficit.
It should be noted that the 2015 Iraq will witness the financial challenges of the state of the security situation in waging war with an unconventional enemy funky transient states. Only experts estimate could reach the cost of financing the war against Daash through 2015 to $ 10 billion, as well as the need to five billion dollars to run the displaced file that number exceeded 2 million Iraqis, as well as poor families affected by the recent events security as they hit their numbers to five million destitute file.
After eight years (2006 - 2014) Jana Iraq, during which nearly 700 billion dollars of oil imports as prices crossed the hundred dollar a barrel for many years, and then drop in prices cycle returned by 40palmih to reach below $ 60 per barrel, ending a period of luxury Policy in the budget that was approved by the Iraqi government, without consideration into account the many reasons that led to the deterioration of prices and fluctuating exchange markets.
In 2004 and after adjusting the pay scale for state employees, the Iraqi budget reached $ 19 billion and a deficit of $ 20palmih operating ratio of not less than 70palmih. This equation lasted until 2014, note that the budget has ballooned to seven times down to $ 140 billion, as were employed full-oil imports, which have grown due to increased oil prices to five-fold and not to increase production, which did not exceed 25palmih, while the increase in population of Iraq had not slept more of 10palmih, Iraq and remained at the mercy of global markets and oil production, which accounts for more than 96palmih of the country's imports.
The rolling stock policy of previous governments (and still is) based on the exchange of all revenues in creating government jobs burdened state unemployment convincing down to the state of the so-called aliens (associate ghost), and the allocation of projects run by government departments incompetent led to widespread corruption down to the projects Phantom and contracts which led to the funding of political corruption and domestic terrorism, where this policy has led to a freeze on public sector and scaled the private sector and the squandering of the savings the state and endangering future governments to the financial challenges in the absence of economic reform and limited sources of income on a single source, namely the oil contained. These and other policies, Iraq materially impoverished and weakened security.
In order not to curse the darkness, we must embark on an elaborate scheme and the roof of a realistic time to turn the equation, but we may use the current circumstances as an opportunity for economic reform which has been delayed for Public decade. Here are some recommendations of economic policy and the relationship that would reduce the fiscal deficit to a reasonable proportion of disbursements and the rationalization of the state giving an official role for the private sector to promote development and the elimination of unemployment in all its forms:
Reforms of the oil and gas sector:
- The establishment of the Federal Council for Oil and Gas Diwani of the Cabinet decision to be vested with executive powers in the formulation of policies and controls while adjusting to the restructuring and powers after the approval of the federal oil and gas law. The heads of the Federal Council for Oil and Gas, Mr. Prime Minister, Federal and includes membership of regulatory bodies such as the Ministry of oil and the Federal Ministry of Natural Resources in the Kurdistan region until the enactment of the oil and gas law, as all parties adhere to regulations and decisions of the Federal Council of the institution to be a substitute for political solutions that may be in conflict with the Constitution and the decisions the Federal House of Representatives.
- Federal legislation oil and gas law, as well as the distribution of federal revenues do not exceed a period of six months from the beginning of the 2015 Act as well as the legislation of the Federal High Court Act and the creation of the court.
- The adoption of the price of a barrel of oil at $ 50 for 2015.
- The auditing of oil agreements with the Kurdistan region to raise the export field Kirkuk rate to 350 thousand barrels (not 300 thousand barrels) - as a first step - and fields and other areas under the control of the Ministry of Natural Resources to 400 thousand barrels per day (and not 250 thousand barrels). This will ensure added imports of 200 thousand barrels and increase the federal budget worth 4.83 billion dollars.
- Cooperation with investing in southern Iraq, global companies solve problems for the purpose of increasing production, to be adopted to increase exports at a rate of 250 000 barrels of southern oil fields above the current rate of export, and this will reap 5.475 billion dollars to the state treasury.
- Cancel support oil derivatives calculates domestic consumption of crude oil on world prices, especially as oil prices are low, making the increase in the cost acceptable to the consumer, note that the provision for domestic consumption of crude oil worth up to 600 thousand barrels per day and this will save the state treasury 13.14 مليار dollars.
- Develop a quick plan in collaboration with international companies to eliminate the burning of associated gas within a period not exceeding 12 months, to collect the gas and used as fuel for power plants, which will stop the use of crude oil and derivatives of plants and the provision of fuel worth five billion dollars a year.
Reforms of the electricity sector:
- Cancel investment and operational allocations to the Ministry of Electricity to be self-funded, this will save the state treasury to seven billion dollars.
- Privatization or conversion of five gigawatts of power to invest and this will provide five billion dollars, down one.
- The use of investment income to finance power transmission projects, and cover the expenses of consumption revenues.
Austerity measures:
- Convert the ration card allocations and costing the state more than $ 6 billion allocated for the displaced families and the poor form of coupons or financial instruments to cover the expenses of food supplies and fuel.
- Review and reduce ladder public sector salaries and allowances and benefits as well as in addition to end the state of ghost employees, where this process will help to provide five billion dollars to the budget.
- Turn off the angel of the state employment policy in style to create jobs and transform ghost employees' salaries (aliens) to cover the expenses of volunteers in the war against Daash.
Fees and Taxes:
-vred Reasonable fee on foreign entry into Iraq (including pilgrims).
- Impose a reasonable fee to the auditors for some circles Kalmror and registration of real estate to make a self-funded and out of the federal budget.
- A review of the tax system and customs (especially luxury goods) and the imposition of taxes commensurate with the current condition not be repulsive to invest and compete with local product.
Other measures:
- Providing facilities to the private sector with regard to the registration of companies and the issuance of investment licenses through a single window with ending bureaucratic chores and shortened period of time not to exceed 72 hours.
- Develop a plan for the privatization of state enterprises from companies affiliated to the Ministry of Industry.
- Assignment of disguised unemployment on social security and linking "associate unemployed," a training program specific cut the time to be able to work in the private and mixed sector companies.
- Reduce the powers of the federal ministries with Srvyatea and give executive powers to the provinces, and the adoption of international companies for the purpose of audit and management companies to monitor the progress of projects contracted Baltoukitat taking into account the controls and global conditions.
- To invite the private sector to compete for projects that were the preserve of the public sector companies while providing tax breaks for giant projects.
- A review of the banking system and support for investment banks to be a partner in the small and medium enterprises as well as the support of these projects with soft loans and guaranteed by the assets of companies.
- Call the investment companies to safe provinces and give facilities to attract capital,
- A review of oil contracts to give incentives K (Reserves Booking) for global companies in exchange for reducing the proportion of payments (benefits) for the next ten years, knowing that the allocations of oil companies invested in southern Iraq will exceed the barrier of $ 16 billion in the year 2015, this amount will increase the fiscal deficit of the budget, so it is logic reschedule payments sovereign guarantees (Sovereign Guaranties) covered the future of oil, as well as through negotiations with the oil companies on a contractual formula balanced served on the parties, the government and the investor.
- Borrowing from the investment bank guarantee strategic projects to be the main partner in the local as well as providing banking facilities to investors in the private sector (industry, agriculture, transport, housing, tourism, services) guarantee corporate assets.
- The Board of reconstruction and fund investments and given the right to borrow and supervision of strategic projects, especially in the construction of airports, ports and housing sectors (in the creation of modern cities) and transport (trains, plant and transmission lines modern) that supply tourism.
Finally, it must be pointed out that part of these recommendations and policies have a direct and Annie effect where the lead to provide an amount of up to fifty billion dollars in 2015, and part of it will be reflected landmarks in the medium term 2-4 years as an investment of natural gas, which will provide at least fifteen billion dollars a year, while the most important of these recommendations part reap Iraq fruit after five years when we move to a market economy after the restructuring of the economic system, and this constitutional requirement has not yet been implemented has been frozen during the previous years due to political corruption and slack administrative, but we We hope that Dr. Haider Abadi government exploit the opportunity of the financial crisis Ksahoh for the advancement of the new Iraqi state to proceed apace scientific and plans are in building state institutions for the benefit of the Iraqi people and to ensure that generations of rights under the federal, state federal democracy.
* Adnan al-Janabi, the Iraqi Council of Representatives member
** Louay Khatib, head of Iraq's Institute for Energy
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January 2015 19:36
Adnan al-Janabi and Louay Khatib * **
On 12/25/2014 at the special meeting of the Council of Representatives of Iraq, has for the first reading of the 2015 budget as presented by the Council of Ministers, which approved the previous day. Under the project, "the general budget of the Federal Republic of Iraq for the financial year / 2015" Code provides that the total revenue (99.
trillion Iraqi dinars composed of (84.3) trillion Iraqi dinars export revenues (3.3) million barrels of oil per day at a price Default of 60 dollars per barrel, and (15.5) trillion Iraqi dinars as income from non-oil.The total allocations amounts (125.2) trillion Iraqi dinars, of which (45.2) trillion dinars investment mostly ongoing projects, and about 80 trillion current expenditure (operational).
Thus, the deficit (23.4) trillion Iraqi dinars, after deducting the amount of "national savings for state employees," which was estimated at $ 2 trillion Iraqi dinars from the deficit.
It should be noted that the 2015 Iraq will witness the financial challenges of the state of the security situation in waging war with an unconventional enemy funky transient states. Only experts estimate could reach the cost of financing the war against Daash through 2015 to $ 10 billion, as well as the need to five billion dollars to run the displaced file that number exceeded 2 million Iraqis, as well as poor families affected by the recent events security as they hit their numbers to five million destitute file.
After eight years (2006 - 2014) Jana Iraq, during which nearly 700 billion dollars of oil imports as prices crossed the hundred dollar a barrel for many years, and then drop in prices cycle returned by 40palmih to reach below $ 60 per barrel, ending a period of luxury Policy in the budget that was approved by the Iraqi government, without consideration into account the many reasons that led to the deterioration of prices and fluctuating exchange markets.
In 2004 and after adjusting the pay scale for state employees, the Iraqi budget reached $ 19 billion and a deficit of $ 20palmih operating ratio of not less than 70palmih. This equation lasted until 2014, note that the budget has ballooned to seven times down to $ 140 billion, as were employed full-oil imports, which have grown due to increased oil prices to five-fold and not to increase production, which did not exceed 25palmih, while the increase in population of Iraq had not slept more of 10palmih, Iraq and remained at the mercy of global markets and oil production, which accounts for more than 96palmih of the country's imports.
The rolling stock policy of previous governments (and still is) based on the exchange of all revenues in creating government jobs burdened state unemployment convincing down to the state of the so-called aliens (associate ghost), and the allocation of projects run by government departments incompetent led to widespread corruption down to the projects Phantom and contracts which led to the funding of political corruption and domestic terrorism, where this policy has led to a freeze on public sector and scaled the private sector and the squandering of the savings the state and endangering future governments to the financial challenges in the absence of economic reform and limited sources of income on a single source, namely the oil contained. These and other policies, Iraq materially impoverished and weakened security.
In order not to curse the darkness, we must embark on an elaborate scheme and the roof of a realistic time to turn the equation, but we may use the current circumstances as an opportunity for economic reform which has been delayed for Public decade. Here are some recommendations of economic policy and the relationship that would reduce the fiscal deficit to a reasonable proportion of disbursements and the rationalization of the state giving an official role for the private sector to promote development and the elimination of unemployment in all its forms:
Reforms of the oil and gas sector:
- The establishment of the Federal Council for Oil and Gas Diwani of the Cabinet decision to be vested with executive powers in the formulation of policies and controls while adjusting to the restructuring and powers after the approval of the federal oil and gas law. The heads of the Federal Council for Oil and Gas, Mr. Prime Minister, Federal and includes membership of regulatory bodies such as the Ministry of oil and the Federal Ministry of Natural Resources in the Kurdistan region until the enactment of the oil and gas law, as all parties adhere to regulations and decisions of the Federal Council of the institution to be a substitute for political solutions that may be in conflict with the Constitution and the decisions the Federal House of Representatives.
- Federal legislation oil and gas law, as well as the distribution of federal revenues do not exceed a period of six months from the beginning of the 2015 Act as well as the legislation of the Federal High Court Act and the creation of the court.
- The adoption of the price of a barrel of oil at $ 50 for 2015.
- The auditing of oil agreements with the Kurdistan region to raise the export field Kirkuk rate to 350 thousand barrels (not 300 thousand barrels) - as a first step - and fields and other areas under the control of the Ministry of Natural Resources to 400 thousand barrels per day (and not 250 thousand barrels). This will ensure added imports of 200 thousand barrels and increase the federal budget worth 4.83 billion dollars.
- Cooperation with investing in southern Iraq, global companies solve problems for the purpose of increasing production, to be adopted to increase exports at a rate of 250 000 barrels of southern oil fields above the current rate of export, and this will reap 5.475 billion dollars to the state treasury.
- Cancel support oil derivatives calculates domestic consumption of crude oil on world prices, especially as oil prices are low, making the increase in the cost acceptable to the consumer, note that the provision for domestic consumption of crude oil worth up to 600 thousand barrels per day and this will save the state treasury 13.14 مليار dollars.
- Develop a quick plan in collaboration with international companies to eliminate the burning of associated gas within a period not exceeding 12 months, to collect the gas and used as fuel for power plants, which will stop the use of crude oil and derivatives of plants and the provision of fuel worth five billion dollars a year.
Reforms of the electricity sector:
- Cancel investment and operational allocations to the Ministry of Electricity to be self-funded, this will save the state treasury to seven billion dollars.
- Privatization or conversion of five gigawatts of power to invest and this will provide five billion dollars, down one.
- The use of investment income to finance power transmission projects, and cover the expenses of consumption revenues.
Austerity measures:
- Convert the ration card allocations and costing the state more than $ 6 billion allocated for the displaced families and the poor form of coupons or financial instruments to cover the expenses of food supplies and fuel.
- Review and reduce ladder public sector salaries and allowances and benefits as well as in addition to end the state of ghost employees, where this process will help to provide five billion dollars to the budget.
- Turn off the angel of the state employment policy in style to create jobs and transform ghost employees' salaries (aliens) to cover the expenses of volunteers in the war against Daash.
Fees and Taxes:
-vred Reasonable fee on foreign entry into Iraq (including pilgrims).
- Impose a reasonable fee to the auditors for some circles Kalmror and registration of real estate to make a self-funded and out of the federal budget.
- A review of the tax system and customs (especially luxury goods) and the imposition of taxes commensurate with the current condition not be repulsive to invest and compete with local product.
Other measures:
- Providing facilities to the private sector with regard to the registration of companies and the issuance of investment licenses through a single window with ending bureaucratic chores and shortened period of time not to exceed 72 hours.
- Develop a plan for the privatization of state enterprises from companies affiliated to the Ministry of Industry.
- Assignment of disguised unemployment on social security and linking "associate unemployed," a training program specific cut the time to be able to work in the private and mixed sector companies.
- Reduce the powers of the federal ministries with Srvyatea and give executive powers to the provinces, and the adoption of international companies for the purpose of audit and management companies to monitor the progress of projects contracted Baltoukitat taking into account the controls and global conditions.
- To invite the private sector to compete for projects that were the preserve of the public sector companies while providing tax breaks for giant projects.
- A review of the banking system and support for investment banks to be a partner in the small and medium enterprises as well as the support of these projects with soft loans and guaranteed by the assets of companies.
- Call the investment companies to safe provinces and give facilities to attract capital,
- A review of oil contracts to give incentives K (Reserves Booking) for global companies in exchange for reducing the proportion of payments (benefits) for the next ten years, knowing that the allocations of oil companies invested in southern Iraq will exceed the barrier of $ 16 billion in the year 2015, this amount will increase the fiscal deficit of the budget, so it is logic reschedule payments sovereign guarantees (Sovereign Guaranties) covered the future of oil, as well as through negotiations with the oil companies on a contractual formula balanced served on the parties, the government and the investor.
- Borrowing from the investment bank guarantee strategic projects to be the main partner in the local as well as providing banking facilities to investors in the private sector (industry, agriculture, transport, housing, tourism, services) guarantee corporate assets.
- The Board of reconstruction and fund investments and given the right to borrow and supervision of strategic projects, especially in the construction of airports, ports and housing sectors (in the creation of modern cities) and transport (trains, plant and transmission lines modern) that supply tourism.
Finally, it must be pointed out that part of these recommendations and policies have a direct and Annie effect where the lead to provide an amount of up to fifty billion dollars in 2015, and part of it will be reflected landmarks in the medium term 2-4 years as an investment of natural gas, which will provide at least fifteen billion dollars a year, while the most important of these recommendations part reap Iraq fruit after five years when we move to a market economy after the restructuring of the economic system, and this constitutional requirement has not yet been implemented has been frozen during the previous years due to political corruption and slack administrative, but we We hope that Dr. Haider Abadi government exploit the opportunity of the financial crisis Ksahoh for the advancement of the new Iraqi state to proceed apace scientific and plans are in building state institutions for the benefit of the Iraqi people and to ensure that generations of rights under the federal, state federal democracy.
* Adnan al-Janabi, the Iraqi Council of Representatives member
** Louay Khatib, head of Iraq's Institute for Energy
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