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Budget 2012: the issues of financial / economic and institutional in Iraq / / Dr. Ali Mirza
By: management of the Centre
Date: Monday 02/13/2012 12:40
Introduction: - received in the media and in official statements draft budget figures for 2012. He stated that the Council
Ministers endorsed the project and sent to the House floor in preparation "for approval. In fact, the details of the draft budget unpublished official documents are available. It is not available on the website of the Ministry of Finance nor between the bills presented for discussion in the House of Representatives site. So will rely, in this article, on any available figures and tables contained in the media.
First ": budget figures
This project comes to a larger size to balance the Iraqi public. The spending allocations that the number was 117 trillion dinars, equivalent to $ 100 billion. At this juncture of the oil price level there is a sense of financial abundance with an average price of Iraqi oil in the first weeks of 2012 about 105 dollars a barrel. As oil exports will surpass the 2012 level in 2011. In any case, the sense of abundance or the fiscal deficit will depend on what happens in the international oil market and the ability of the oil sector in the export quantities planned. The table (1) allocations of expenditure and revenue budgets of 2011 and 2012, budget deficits and guestimate the actual numbers for 2011.
Table (1) federal budget, trillion dinars
2012
2011
Sources: Budget 2011: the website of the Ministry of Finance. Budget 2012: Uzmatk, [You must be registered and logged in to see this link.] as well as articles appearing in multiple sites. 2011 actual numbers / Raw has been appreciated in the light of the 2011 oil revenues and the actual production of oil and gas, refining the actual site of the Iraqi Oil Ministry. In the light of estimated compensation (5%) and projected expenditures for the petrodollar. Petro-dollar allocations are paid to the provinces producing oil, gas and oil by Almsfih dollars per barrel or per 150 m 3 of gas. Noted in the table when the collection of non-compliance with the paragraphs set out the total due to rounding.
Note: Sarabv equal to 1.170 dinars per dollar.
Perhaps the first thing that brings attention to the budget of 2012 is the size of salaries, grants, subsidies and social benefits. The paragraph of allocations in the state employees' salaries and pensions of about 40.1 trillion dinars, while the paragraph grants, subsidies and social benefits 11.6 trillion. Most of the second paragraph with the exception of some of the obligations of State and others in the "Grant", is the subsidies and social benefits (including ration subsidies and public-sector enterprises). If we assume that 75 percent of the second paragraph represent subsidies and social benefits, the total Aafiqrh the first and the second 75% of the total 48.8 trillion dinars. This is equivalent to 41.7 billion. [I]
These salaries, subsidies and social benefits that affect almost all Iraqi families. We have between Deputy Prime Minister for Energy, in an interview with the "Iraqi" space in the 16/12/2011, the number who receive salaries from the State is 2.75 million and the number of retirees is 2 million and that receive subsidies and social benefits of a million. In other words, the total number of 5.75 million people. In light of the average number of family members in Iraq, which 6.9 person [ii] and an estimated population of 34.3 million in mid-2012, the number of Iraqi families $ 5 million. It must be mostly related to more or less government payments recipients (5.75 million people). Despite the possibility of a recurrence in the names of recipients of income from the state (due to corruption) and reiterates employees or recipients of pensions and benefits in the same family, but it can say this, in the light of these indications, that the Iraqi families that almost all rely on the state budget!
II ": cyclical in oil revenues and the budget
Characterized by oil prices in the international market during the past four decades, similar courses cycles that ranged up "and down" on the lines of directional bullish for the periods 1970-1978 and 2000-2011 line directionally descending for the period 1979-1999. [Iii] In each cycle of rise and prices fall and with it oil revenues. And when they do not make the necessary arrangements to compensate for the volatility of prices are the expenses of the budget allocations to the detriment of the volatility of the process of development and adversely affect "economic climate. Since the draft budget is in the year preceding the year in question, the level of oil prices Asadarat time of preparation of the budget, affect the size of the customizations. But in Iraq continue to rise the volume of spending allocations in the budgets of two years 2009 and 2010, compared with 2008, despite the very low oil prices during the period from November 2008 to April 2009. This is due to three factors. The first is the budget surplus accumulated since 2003, which allowed most of the funding deficit, especially in 2009. And the second is the difficulty of reducing the current expenditure for reasons of electoral and populist. The third is that the decline in oil prices but was short "step down after the standard reduction historical periods that have occurred, especially those that lasted from 1981/1982 to the end of the nineties of the last century.
However, the volatility of public spending with the volatility of oil revenues going to happen in Iraq if the long period of low prices of oil revenues, and approached the surplus accumulated from running out. And usually the first victim in spending cuts is the investment allocations. It is difficult novitiate reduction in current expenditure, owing to the difficulty of reducing the entry of the majority of the population for political reasons. This command should be paid attention to the issue of avoiding volatility in future spending, as much as possible. In spite of the presence of other arrangements are possible to avoid the volatility of prices and then oil revenues as measures of hedge hedging in the international financial market as well as mutual funds to stabilize prices for groups of countries producing raw materials, the international experience common now and in the most oil-producing countries is to configure and use the reserve funds of oil. This is the subject of the next paragraph.
III: "Oil Reserve Fund
To demonstrate the importance of having an account or fund which maintains a budget surplus is appropriate, for the purpose of description, an interview and compared between the net balance of payments and the net budget. In the balance of payments which records all receipts of the state and foreign currency payments, in a given year, if the increased receipts of payments on the difference (surplus) go to the account or fund called foreign currency reserves. This account is managed by the Central Bank published its score each year, "There are rules for the management and use. As the most saves in the short-term deposits abroad, it will yield a "well." The important point here is that this account has known the rules of use, control and audit. When the increase of receipts of payments of foreign currency in a given year are usually resort to several measures to finance the deficit, including withdrawals of foreign currency reserves and / Oaloguetrad the outside. In the case of the budget in Iraq, there is no account or fund a clearly defined budget surpluses are kept. When actual revenues to increase spending as happened during the period 2004-2008 and 2011, there is no similar fund or account into which these surpluses and publish data on its assets as reserves in foreign currency. All we know on the status of the accumulated surplus is a "circular cash from the previous year's budget," which are contained in the budget law each year. Of course, the accumulated surpluses are kept in the accounts for the benefit of the Ministry of Finance Central Bank of Iraq or the Iraq Development Fund, Development Fund of Iraq, DFI. However, these calculations do not publish what it refers to the size of the surplus or about the way his administration and how to dispose of and follow-up and accountability management.
Therefore, it is appropriate to change this reality. In most oil-producing countries there is an account or fund budget surplus goes to him and decides to methods of management, investments and regulatory requirements for follow-up and accountability. It is subject to parliamentary control and non-parliamentary and publishes its assets each year, "added so that you know him and drag him. Perhaps the oil reserves funds that have spread in most of the oil the best proof of the importance of this subject. The leave it to the published accounts of the Ministry of Finance does not serve the transparency and good management accumulated surpluses. It may be recalled that the Minister of Finance and Central Bank Governor in a letter of intent [iv] sent to the Director-General of the International Monetary Fund on 3 March 2011 a male intention to re-build a "financial stocks financial buffers" to preserve the surplus part of 2011. But the message did not specify what these stocks and whether the intention to make it a reserve fund or accounts remain of the Ministry of Finance. Then is the entity that will be managed and monitored and Torteuralah added to it and draw from them?
It is noteworthy that countries differ in the mechanism of addition and withdrawal of funds. For example, in Norway is added automatically to the budget surplus reserve fund (Government Pension Fund Government Pension Fund-Global). In Chile, Libya is to predict the price of oil before the beginning of the budget and called on the price predicted by the "reference price". At the end of the budget is added the difference between the price of the reference price and accrued to the Fund. In Kuwait, Alaska and Alberta deduct a percentage of revenue from "and add to the fund. The drag varies depending on "the different institutional frameworks, but they are all" used to finance the budget deficit. [V]
IV ": the annual horizon and the longer the horizon
The absence of an economic perspective / Mali serious medium and long-term in Iraq raises the question of the sustainability of the current fiscal path and increase the probability of falling in future crises shown by experiences in Iraq and in other oil countries. The exclusive perspective in the development of the annual budget, particularly for capital spending and lack of interest in long-term sustainability of oil revenues is a clear case of absence of proper planning.
Budgeting has become a medium / long-term is necessary to secure to avoid future crises. Organized in terms of this budget current expenditure and investment on the one hand and the resources required on the other hand, a future perspective appropriately, so that it can pave the volatility of expenditures in concert with the rise and decline of oil revenues. We have taken various countries, especially the oil by following this exercise. Authorities have recognized the financial / cash in Iraq this matter and has promised to his followers in the "letter of intent" referred to above. However, what may hinder the application could be in Iraq now total of the following:
• Absence suggests a look at medium / long term with the Ministry of Finance.
• The National Development Plan 2010-2014 released by the Ministry of Planning does not contain the criteria and process indicators are useful for the organization of current expenditure and investment for the medium term. The one hand, investment expenditure plan contains a total (and the amounts of sectoral) for capital spending for the plan period and there is no list of projects (and mandated and timing) in the plan so that you can budget to guide medium-term. The truth is painful, since the 1976-1980 plan was abandoned for the inclusion of a list of projects in the plan document. This error was repeated in succession "after that and also repeated" in the Plan of 2010-2014. Nor is there specific steps to implement policies and timing of implementation and those responsible for them. This means that the National Development Plan is a document without the means and practical policies and projects for implementation. [Vi]
• There is no long-term perspective agreed for production of oil or oil revenues. This is worthy of observation. The most important principles of economic / financial sound in oil country is to try to diagnose Almsaralmtouka oil revenues for the time span between 20 and 25 years old. Such a path allows formation of so-called roof / ceilings oil resources, resource ceilings or envelope. This allows in turn determine the spending ceilings that comply with these (plus "non-oil resources), sustainable spending any sustainable. Thus, the deposit can be differences between the annual returns and actual expenditure sustained in a reserve fund if the oil resources of the largest sustained spending and do to fill the shortage (or most) of the Reserve Fund if the opposite happened. In Iraq, there is no clear vision for the future is not a serious attempt to create an oil reserve fund. Doing this exercise is not aimed Commitment numbers ceilings literally "formation, but a general framework and indicators are useful for predicting future crises and to avoid them as much as possible.
• And perhaps explains the lack of interest in this general sense is that Iraq is on the verge of a major oil production and that future returns will be more than enough without the need for planning. Such a view is productive because it leads to waste and access to adoption lead to serious consequences when oil prices collapse or fall production / export.
V ": the deficit and its financing
A deficit of 14.8 trillion dinars in the 2012 budget component "of about 12.6% of the spending power allocations. After determining the allocations, the most important reason for this deficit is due to the size of oil revenues. It has estimated oil revenues at a rate of $ 85 a barrel and export 2.6 million barrels / day. This compares with the $ 105 price and export 2.17 million barrels / day in 2011. The use of 2.6 million barrels / day in the calculations seem reasonable. " In an interview with the website Iraq Oil Report on 9 December 2011 The Minister of Iraq's oil production (and hence export) of oil in 2011 was less than energy production, although it set a production which is the limited energy export facilities. He said that the work underway to increase the export capacity to an average of 2.6 million barrels / day in 2012.
On the other hand, the use rate of $ 85 a barrel in the calculations may be conservative. " Although the reservation requires careful and proper planning but the presumption of low price of twenty dollars in 2012 for 2011 could include Xia, "an exaggeration. [Vii] Despite its reference to the uncertainty the great surrounding prices, outcome expectations that are available do not see the likely" significant "to lower prices in 2012 the 2011. The Department of Energy Information Administration EIA expects to drop in 2012 to increase the price of West Texas crude of 95 dollars per barrel in 2011 to $ 100 in 2012 (with the knowledge that the average price of Iraqi oil was higher than the price of West Texas in 2011). The drop and the International Energy Agency IEA annual report in November 2011 it is likely to rise in oil prices in the "short term". On the other hand on the reserving party, the drop OPEC annual report in November 2011 assumed a range of prices between $ 86 to $ 96 a barrel during the decade beginning in 2012. [Viii] In light of this becomes expected price of a barrel of oil highest price that made obligatory budget 2012 ($ 85) justified "and becomes a deficit estimated by the exaggerated" it.
I've mentioned the budget bill for 2012 that one of the sources of funding the deficit will be "recycled the cash balance of 2011." But what is the size of the circular cash balance of 2011? Here we face the problem that we have mentioned previously, "a lack of official data on the accumulated surplus (cumulative) since 2003 until the end of 2011. But with the available data in the report of the consultations the fourth paragraph of the IMF with Iraq in 2009 show that the size of the budget surplus accumulated total in the end of 2009, 11.7 trillion dinars. [Ix] The report of the consultations for the year 2010 shows that the budget achieved a surplus in the first half of 2010. [x] On the other hand, the 2011 budget stated that the sources of funding for a projected deficit would be "critical round of the 2010 budget." All this means that the accumulated surplus at the end of 2010 were positive. If we add to the budget surplus achieved at the end of 2011 and which we value as shown in Table (1) above by more than 8 trillion dinars shown that in the end of 2011, the aggregate of the surpluses of the budget (in the accounts of the Ministry of Finance and / or fund the development of Iraq's DFI) may range between 8 to 20 trillion dinars. This means that the Ministry of Finance will most likely will not resort to borrowing, whether from the central bank or other banks or from the International Monetary Fund. However, the uncertainty of the volume of accumulated surplus or rules of use make this prediction is subject to the same uncertainty as well. "
VI: "Kuwait war reparations and foreign debt servicing
Iraq pays an annual "5 percent of its oil exports to pay war reparations Kuwait. And deduct the annual payments starting "before the deposit remaining in the Iraq Development Fund, DFI. You have reached the compensation which was ratified by the United Nations Commission on Compensation of about 52.4 billion dollars. At the end of 2011 amounted to 35.1 billion of which hit countries and the remaining 17.3 billion. It is noted from the table (1) that is allocated for compensation in 2011 of 3.59 trillion dinars. However, the actual amount of the payment of 4.85 trillion dinars (4.1 billion dollars). The reason that this variation compensation, representing 5% of oil exports which were estimated (ie, the value of exports) in the 2011 budget a low level compared with the value already achieved. " What we will pay for compensation in 2012 will be higher than the ad hoc (4.7 trillion dinars or 4.0 billion dollars) when oil prices rise for those on which the accounts of the budget 2012.
On July 1, 2011 began servicing external debt as well and will continue for 28 years until mid-2039. Unlike the amount of compensation is not available accurate information on the total amount of foreign debt on Iraq, despite the passage of nearly seven years to limit the indebtedness. The uncertainty about the total debt situation stems from the Gulf. And familiarized themselves with the reports of the consultations the fourth paragraph of the International Monetary Fund annual with Iraq, notes the existence of clear figures on the Paris Club debt and commercial debt and debt is the Gulf, especially after the expiration phases reduced in 2008/2009. But because of the uncertainty of the debt of the Gulf there is no clear number for the total debt. Although debt is not resolution of the Gulf-mentioned reports of the Fund continue Assuming that debt reduction Gulf will "" in the coming year. " And when it does not get paid to be the year that followed, and so on. For example, in the 2008 report of the consultations mentioned in p 30 that the total external debt was $ 102 billion at the end of 2007 and will become a 32 billion at the end of 2008 and 33 billion at the end of 2009. But in the 2009 report of the consultations mentioned in p. 61 that the total in 2009 is $ 137 billion and it will become 47 billion in 2010. In a report consultations 2011, which was released in March stated in page 25 that the total external debt at the end of 2010 is $ 107 billion and will be 37 billion at the end of 2011. But 2011 did not reduce the debt has passed the Gulf.
The uncertainty that this has to be hit too. "Budget figures. Noting from the table (1) that was allocated to external debt service amounted to 3.32 trillion dinars (2.8 billion dollars) in the budget of 2011 and 4.65 trillion dinars (4.0 billion dollars) in the budget of 2012. As the debt service (interest and the parent) depends on the size of the debt (interest rate), it is difficult to know the size that was calculated on the basis of these customizations.
It has been proved that the interest rate is calculated on the basis of debt service, in advance, "the level of 5.8 percent. The fixed rate of interest has advantages and disadvantages. It increases when inflation tends to raise the different countries where interest rates. Thus, the installed price is useful. " But at the present time which is approaching the interest rate on the dollar from the ground up and in light of the efforts to revive the world's various economies, it is not expected to raise interest rates in the foreseeable future. This seems to interest rate used to calculate the debt service on the high-Iraq "very" now ".
Seventh ": the budget and inflation
It has been inflation in the years before 2008, a function of the security situation and the concomitant shortage in supply of commodity, especially in fuel and petroleum products. This is in addition to imported inflation, particularly food price inflation. Since 2003, played in fuel prices play a "key" to the escalation of inflation until the year 2007 (extreme tightness in the fuel) and then in the reduced, then, when the improved security situation and took action to change the fuel prices and procedures to increase the display. [Xi] The rate of inflation about 35.9% a year, "during the period 2002-2007, falling until it reaches the negative inflation (rate of decrease in prices) rate of -2.8% in 2009 and then rise moderately to 2.2 in 2010 and to 5.5% in 2011. Table (2) the development of inflation (as is the relative size change of consumer prices) since 2003 and the contribution of the various paragraphs of spending it.
Table (2) inflation in Iraq and the contribution of the paragraphs of the spending
The contribution of the paragraphs of spending in inflation
Annual inflation rate,%
Source: Calculated from indices of consumer prices, the Central Bureau of Statistics. Compound annual rate of inflation for the period 2003-2007 calculated between 2002 and 2007.
Note: Before 2010, comparisons between the figures, standard base 1993. Since 2010 and the comparative merits of 2007. Please note that the Central Bureau of Statistics provides figures Balosasin 2009.
The period 2008-2011 was characterized by moderate inflation did not play a role in pressure demand "substantial" in pushing prices upward. Perhaps the most important indicators of the degree of change in pressure demand, especially investment, is to change the size of the prices of services such as transport, transportation, rent and other services. During this period, as in previous periods, the impact of changing prices of services (covered in another paragraph in the table 2), except for rent, a moderate, "but it was negative" in 2009. The increase of the relative importance of change rental rates since 2003 in inflation as seen from the table, they go back to the security situation and schizophrenia (segmentation) real estate markets rather than the impact of demand pressure. It was a change in the main paragraphs in consumer prices during the period 2008-2011, as in the previous period, is the fuel, rent and food.
Indicates moderate rate of inflation during the last four years that the determinants of absorptive capacity has not been overcome despite the rise in public spending in the budget. In the relatively stable security situation, "the most important indicators of access to or overcome the limits of the capacity is the first" accelerated the rate of inflation, and secondly, "the acceleration rates of the services. Both are still moderate "relatively."
But that may not last long, "especially when Tssttb security situation and unite some markets sheared from each other now," (a market the property) so that it can be returned to the experience of the seventies of the last century. The growing volume of expenditure and the arrival of the annual appropriations to 117 trillion dinars in the budget of 2012 and the official statements of wanting to implement investment projects more quickly than the former, as well as the start of oil investments in various parts of Iraq could lead to an escalation of the degree of demand pressure. This must be cautious in this area through serious planning to break bottlenecks occur as soon as through the working groups coordinating between ministries, regions and different regions, especially in points of import and export, ports, roads, etc.. It should AWAY FROM statements of intent and announced the start of "explosive Plan" and bearing the new lack of interest in the content of potential bottlenecks. What has happened in the explosive plan for the seventies of the last century was to unleash all kinds of investment and current expenditure at the same time Altmahl Removing bottlenecks in quickly and seriously. Has exacerbated the situation, then maintain protection of quantitative and administrative restrictions on the conversion of foreign currency and import restrictions on private sector activity. It must be attention that Iraq is a task not have access to the sea and this is what leads to amplify the bottlenecks. This is unlike countries that have free ports can be used to break bottlenecks ports and equipment from abroad.
VIII ": government use and rent-seeking trap
The most important aspects of a rentier economy is the magnitude of government use. Is the predominant form in the oil-producing countries especially Iraq, Libya, Algeria, etc.. So that the volume and the proportion of government use in total use in the oil states is the most important and most difficult traps rentier that occurred in these countries. In Iraq it is in addition to conditions imposed rent increase, the state now operating based on the achievement of social peace and to satisfy the opposing groups and communities through the various amplified this use. In addition, the preservation of descent Mahassah in use at many levels of government contribute effectively to the increasing number of users of the state. In addition to 2.75 million users in the state budget of 2012 will add 59 000 others. In successive years will increase public pressure to increase government use in greater numbers.
Therefore, it is not expected to solve this problem in Iraq for the foreseeable future. The bulk of what can be done now is to look at the credibility of the government use numbers and verify the presence of persons employed. As it is believed that there are false names of the categories may receive a salary from several sides. It turns out this is also "in a country other oil.
IX ": subsidies and poverty
In a survey conducted by the Central Bureau of Statistics on poverty in 2007, the results show that the poor represent about 23% of the total population in Iraq (ie, those who are below the "poverty line"). [Xii] No data are available on the proportion of the poor for years later. There are some reasons to doubt the applicability of this ratio at the present time. As noted earlier, "the number of people receiving income" from the state is now the salaries or social benefits may include most of the Iraqi families. As the allocations of salaries and social benefits in the budgets of 2011 and 2012 amounted to 41.5 and 48.8 trillion dinars respectively [xiii] (35.5-41.7 billion dollars). And even with a significant degree of disparity in salaries of public subsidies and the spread of corruption, the rate of income from these customizations (including ration on volatile) is able to satisfy much of the required minimum number of calories of food for most individuals. This minimum is, by the way, the basis of estimating the poverty line, which was built on the basis of the proportion of people below the poverty line in 2007. I also believe that "there is exaggeration in estimating the poverty line, the same in 2007. The reason for this belief is the use of survey that year for a minimum amount of calories 2337 kcal / person / day. This limit is the one who decided the poverty line. What is commonly used in the estimates of the poverty line of less than that and up to 2000-2100 kcal / person / day. Therefore, the use of these limits will reduce the proportion of the population below the poverty line.
However, data show poverty to the survey mentioned that parts of Iraq are different in terms of the proportion of the population below the poverty line. In the three provinces, Kurdish, which was characterized by a high degree of security compared to other parts of Iraq in 2007, the proportion of the population ranged from below the poverty line than 3% in Irbil and Sulaymaniyah to 9% in Dohuk. But in Baghdad, the percentage reached 19% to jump to 40-41% in Salaheddin, Babil and 49% in Muthanna.
The allocation of subsidies and rationing in the budget involves the need to solve the dilemma of thoughtful and careful. The Continuing subsidies and the distribution of rations to prevent the aggravation of malnutrition in the past. But the other side of the dilemma is that the corruption and smuggling exhaust part, "regardless" of the ration, leading to the loss of does not benefit the poor and carries the burden of the budget "increasingly. So must study how to distribute subsidies to eligible applicants already. " If the ration can be converted to the benefits received by Msthakoha actually "either coupons or direct cash payments to eligible, this solution is suitable if it avoids corruption and loss without the negative impact on the beneficiaries.
X. ": the federal budget, regions and areas
Because of lack of clarity in the relationship between interactive and Federal Ministry of Finance and financial authorities in the regions in the preparation, implementation and follow-up budget (interaction from top to bottom and vice versa), this paragraph are more questions and inquiries, including an analysis "of the reality known.
There is an overlap in the role of the federal Ministry of Finance as an institution and the role of different regions and the Kurdistan region. This is a reflection of overlap in the Constitution (for example, Article 114). There are national projects carried out by the federal ministries and projects of regional and zonal carried out by local authorities. According to the material (112 121 and 125) of the Constitution distributes oil revenues to the regions and districts according to population. We have introduced the so-called Balbtrodolar It represents additional financial allocations in the budget for areas producing oil and gas and refined oil. Any addition to the allocations according to population. There are also allocations for the development of the regions funded by the federal treasury. It is not entirely clear "how is the report of the allocations in the budget is actually" to be bound by all these rules and laws. In the absence of evidence and instructions published and known as well as in the absence of a plan and a clear national plans and regional and zonal comes to perhaps become a "bargaining power of regions and the various political groups. Perhaps the clearest case is the bargaining power of Kurdistan, where they receive a share amounting to 17% of the budget and it appears to decide current and investment expenditures. In other areas, there is no known specific rules about how to act and decide Pt_khasasatha distributed among the various paragraphs spending power. It also raised questions about the local resources of the regions and how they are being disposed of and what is the role of the Ministry of Finance in the formulation and implementation of local budgets? The lack of clarity in the form of the relationship the federal / territorial levels and low technology may lead not only to the modest implementation, control and efficiency, but to the spread of corruption, financial and technical support.
Eleventh: budget preparation, implementation, monitoring and evaluation and dissemination
Although allocations for college expenses equal to one hundred billion dollars in Iraq, the budget is the methodology and techniques and methods are not clear to the outside observer. There is no evidence of manuals, handbooks published on the official documented ways and stages of preparation and institutional deliberations and the final wording. It is not known the existence of programming of the timing of implementation of various paragraphs of the current expenditure and investment and to ensure availability of cash or bank credit for implementation. If we compare this situation balance sheets of some Arab states that the volume of expenditure allocations which is much less than in Iraq, where budgets are issued in different classifications in a coherent and consistent. In addition, these countries took the budget to include criteria for follow-up and timing for implementation of the various paragraphs of the budget. This is in addition to banking regulation mechanism for the provision of cash or credit at the time needed by stakeholders to implementation. All through institutional finance / banking and using an electronic mechanism. Also extended it to include some budget indicators for the evaluation useful to follow up the effectiveness of expenditures and the extent of their access to target groups.
With the exception of what is leaking for some or all of the schedules, the draft budget, in Iraq, eclipsed from circulation until formally ratified the Council of Representatives and pass to ratify have plenty of time. Which is available after the expiration of this period is the budget bill that contains less information, instructions and without the attached tables. And when that law shall be published in the Rules section on the website of the Council of Representatives. As for what is available from the Details section of it were allowed at the site of the Ministry of Finance coordinated schedules is as close as to be non-consecutive drafts and in some cases passing through the "gap from the pages do not exist.
The continuation of the prevailing methods in the preparation and discussion, implementation and evaluation leading to low efficiency and lack of transparency. The large size of the expenditure involved purchases of government and large contracts will be given room to "widespread" corruption in the absence of details and rankings are interrelated and help to clear up and control. So it should work on the preparation of technical staff Muqtadir to do to prepare the budget through the benefit of sophisticated institutional standards and international applications. For example, Iraq's commitment to apply the methodology, "Government Finance Statistics Manual GFSM 2001" [xiv] in government accounting requires the progressive "to achieve a clear interview between budget categories and classifications contained in this directory. Should be provided as well as sections that run on the budget following the publication of volumes and made available to professionals and citizens of the authors' interest in real implementation of the budget the highest possible efficiency.
Thanks: I would like to thank all of the d. Dr. Fadhil Mahdi. Superficial inch to review the article and providing helpful suggestions to improve it. I also thank d. Superficial on the graph at the beginning of the article.
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Paragraph 1 beyond salaries, subsidies and social benefits in the budget of 2012 (41.7 billion) the size of the gross domestic product (GDP) for Tunisia in 2008, which amounted to 40.2 billion dollars. GDP derived from Tunisia:
UNDP (2010) Human Development Report 2010.
[Ii] reported the size of the Iraqi family in the two surveys are both issued by the Central Bureau of Statistics' survey of living conditions in Iraq 2005 "in Arabic and" Economic Survey / Social IHSES-2007 "in English. The total household size 6.8 people in the first survey and 6.9 people in the second survey.
[Iii] in one of the following paragraphs of the source covers the behavior of oil prices until 2010. Have you update period for the purpose of this article until 2011 (with respect to oil prices, nominal).
Merza, A. (2011), 'Oil revenues, public expenditures and saving / stabilization fund in Iraq', International Journal of Contemporary Iraqi Studies 5: 1, pp. 47-80, doi: 10.1386/ijcis.5.1.47_1.
[Iv] See: IMF (2011) Iraq Second Review Under the Stand-By Arrangement, Requests for Waiver of Applicability, Extension of the Arrangement, and Re-phasing of Access-Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Iraq, IMF Country Report No. 11/75, March.
[V] See: Merza, A. (2011), Op. cit.
[Vi] Ali Mirza (2011) "Notes on planning in Iraq: the institutional structure and functions," Journal of Economic Studies, the House of Wisdom - Baghdad, No. 25.
[Vii] The entry of Libya for the export market in 2011 after interruption could lead to lower prices, but not to the extent set out assuming the accounts of the budget 2012. On the other hand, the escalating crisis with Iran and then the possibility of confrontation in the Persian Gulf could lead to an escalation of prices. But on the other hand may lead to the interruption of export through the Gulf.
[Viii] the following sources, in turn, "the U.S. Energy Information Administration and the International Energy Agency and OPEC:
US Energy Information Administration (2012) Short ‐ Term Energy Outlook, January.
International Energy Agency, IEA (2011) World Energy Outlook 2011, Executive Summary, November.
OPEC (2011) World Oil Outlook 2011, November.
[Ix] See: IMF (2010) Iraq: Staff Report for the 2009 Article IV Consultation and Request for Stand-By Arrangement, Report No. 10/72, March, Page 9.
[X] See: IMF (2010) Iraq: First Review Under the Stand-By Arrangement, Request for Waiver of Non-observance of a Performance Criterion, Waiver of Applicability, and Re-phasing of Access, Report No. 10/316, October, Page 3.
[Xi] See: Merza, A. (2010), "Fuel Prices and Inflation in Iraq: The Rise and Fall of a Supply Shock", Middle East Economic Survey, April.
[Xii] Central Bureau of Statistics and Information Technology (2009) report the poverty line and the features of poverty in Iraq, the Ministry of Planning and Development Cooperation, Baghdad, March, page 11.
[Xiii] As noted previously, "equal to each of these two figures, in the year concerned, the total salaries and pensions plus" 75% of the paragraph subsidies, grants and social benefits in a table (1).
[Xiv] See: IMF (2001) Government Finance Statistics Manual 2001, Washington DC.
* D. Mirza Ali previously worked "in the ministries of oil and the Iraqi Planning and as chief advisers in the Department of Economic and Social Affairs of the United Nations.
Sources and margins
Paragraph 1 beyond salaries, subsidies and social benefits in the budget of 2012 (41.7 billion) the size of the gross domestic product (GDP) for Tunisia in 2008, which amounted to 40.2 billion dollars. GDP derived from Tunisia:
UNDP (2010) Human Development Report 2010.
[1] reported the size of the Iraqi family in the two surveys are both issued by the Central Bureau of Statistics' survey of living conditions in Iraq 2005 "in Arabic and" Economic Survey / Social IHSES-2007 "in English. The total household size 6.8 people in the first survey and 6.9 people in the second survey.
[1] in one of the following paragraphs of the source covers the behavior of oil prices until 2010. Have you update period for the purpose of this article until 2011 (with respect to oil prices, nominal).
Merza, A. (2011), 'Oil revenues, public expenditures and saving / stabilization fund in Iraq', International Journal of Contemporary Iraqi Studies 5: 1, pp. 47-80, doi: 10.1386/ijcis.5.1.47_1.
[1] See: IMF (2011) Iraq Second Review Under the Stand-By Arrangement, Requests for Waiver of Applicability, Extension of the Arrangement, and Re-phasing of Access-Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Iraq, IMF Country Report No. 11/75, March.
[1] See: Merza, A. (2011), Op. cit.
[1] Ali Mirza (2011) "Notes on planning in Iraq: the institutional structure and functions," Journal of Economic Studies, the House of Wisdom - Baghdad, No. 25.
[1] The entry of Libya for the export market in 2011 after interruption could lead to lower prices, but not to the extent set out assuming the accounts of the budget 2012. On the other hand, the escalating crisis with Iran and then the possibility of confrontation in the Persian Gulf could lead to an escalation of prices. But on the other hand may lead to the interruption of export through the Gulf.
[1] the following sources, in turn, "the U.S. Energy Information Administration and the International Energy Agency and OPEC:
US Energy Information Administration (2012) Short ‐ Term Energy Outlook, January.
International Energy Agency, IEA (2011) World Energy Outlook 2011, Executive Summary, November.
OPEC (2011) World Oil Outlook 2011, November.
[1] See: IMF (2010) Iraq: Staff Report for the 2009 Article IV Consultation and Request for Stand-By Arrangement, Report No. 10/72, March, Page 9.
[1] See: IMF (2010) Iraq: First Review Under the Stand-By Arrangement, Request for Waiver of Non-observance of a Performance Criterion, Waiver of Applicability, and Re-phasing of Access, Report No. 10/316, October, Page 3.
[1] See: Merza, A. (2010), "Fuel Prices and Inflation in Iraq: The Rise and Fall of a Supply Shock", Middle East Economic Survey, April.
[1] Central Bureau of Statistics and Information Technology (2009) report the poverty line and the features of poverty in Iraq, the Ministry of Planning and Development Cooperation, Baghdad, March, page 11.
[1] As noted previously, "equal to each of these two figures, in the year concerned, the total salaries and pensions plus" 75% of the paragraph subsidies, grants and social benefits in a table (1).
[1] See: IMF (2001) Government Finance Statistics Manual 2001, Washington DC.
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By: management of the Centre
Date: Monday 02/13/2012 12:40
Introduction: - received in the media and in official statements draft budget figures for 2012. He stated that the Council
Ministers endorsed the project and sent to the House floor in preparation "for approval. In fact, the details of the draft budget unpublished official documents are available. It is not available on the website of the Ministry of Finance nor between the bills presented for discussion in the House of Representatives site. So will rely, in this article, on any available figures and tables contained in the media.
First ": budget figures
This project comes to a larger size to balance the Iraqi public. The spending allocations that the number was 117 trillion dinars, equivalent to $ 100 billion. At this juncture of the oil price level there is a sense of financial abundance with an average price of Iraqi oil in the first weeks of 2012 about 105 dollars a barrel. As oil exports will surpass the 2012 level in 2011. In any case, the sense of abundance or the fiscal deficit will depend on what happens in the international oil market and the ability of the oil sector in the export quantities planned. The table (1) allocations of expenditure and revenue budgets of 2011 and 2012, budget deficits and guestimate the actual numbers for 2011.
Table (1) federal budget, trillion dinars
2012
2011
Sources: Budget 2011: the website of the Ministry of Finance. Budget 2012: Uzmatk, [You must be registered and logged in to see this link.] as well as articles appearing in multiple sites. 2011 actual numbers / Raw has been appreciated in the light of the 2011 oil revenues and the actual production of oil and gas, refining the actual site of the Iraqi Oil Ministry. In the light of estimated compensation (5%) and projected expenditures for the petrodollar. Petro-dollar allocations are paid to the provinces producing oil, gas and oil by Almsfih dollars per barrel or per 150 m 3 of gas. Noted in the table when the collection of non-compliance with the paragraphs set out the total due to rounding.
Note: Sarabv equal to 1.170 dinars per dollar.
Perhaps the first thing that brings attention to the budget of 2012 is the size of salaries, grants, subsidies and social benefits. The paragraph of allocations in the state employees' salaries and pensions of about 40.1 trillion dinars, while the paragraph grants, subsidies and social benefits 11.6 trillion. Most of the second paragraph with the exception of some of the obligations of State and others in the "Grant", is the subsidies and social benefits (including ration subsidies and public-sector enterprises). If we assume that 75 percent of the second paragraph represent subsidies and social benefits, the total Aafiqrh the first and the second 75% of the total 48.8 trillion dinars. This is equivalent to 41.7 billion. [I]
These salaries, subsidies and social benefits that affect almost all Iraqi families. We have between Deputy Prime Minister for Energy, in an interview with the "Iraqi" space in the 16/12/2011, the number who receive salaries from the State is 2.75 million and the number of retirees is 2 million and that receive subsidies and social benefits of a million. In other words, the total number of 5.75 million people. In light of the average number of family members in Iraq, which 6.9 person [ii] and an estimated population of 34.3 million in mid-2012, the number of Iraqi families $ 5 million. It must be mostly related to more or less government payments recipients (5.75 million people). Despite the possibility of a recurrence in the names of recipients of income from the state (due to corruption) and reiterates employees or recipients of pensions and benefits in the same family, but it can say this, in the light of these indications, that the Iraqi families that almost all rely on the state budget!
II ": cyclical in oil revenues and the budget
Characterized by oil prices in the international market during the past four decades, similar courses cycles that ranged up "and down" on the lines of directional bullish for the periods 1970-1978 and 2000-2011 line directionally descending for the period 1979-1999. [Iii] In each cycle of rise and prices fall and with it oil revenues. And when they do not make the necessary arrangements to compensate for the volatility of prices are the expenses of the budget allocations to the detriment of the volatility of the process of development and adversely affect "economic climate. Since the draft budget is in the year preceding the year in question, the level of oil prices Asadarat time of preparation of the budget, affect the size of the customizations. But in Iraq continue to rise the volume of spending allocations in the budgets of two years 2009 and 2010, compared with 2008, despite the very low oil prices during the period from November 2008 to April 2009. This is due to three factors. The first is the budget surplus accumulated since 2003, which allowed most of the funding deficit, especially in 2009. And the second is the difficulty of reducing the current expenditure for reasons of electoral and populist. The third is that the decline in oil prices but was short "step down after the standard reduction historical periods that have occurred, especially those that lasted from 1981/1982 to the end of the nineties of the last century.
However, the volatility of public spending with the volatility of oil revenues going to happen in Iraq if the long period of low prices of oil revenues, and approached the surplus accumulated from running out. And usually the first victim in spending cuts is the investment allocations. It is difficult novitiate reduction in current expenditure, owing to the difficulty of reducing the entry of the majority of the population for political reasons. This command should be paid attention to the issue of avoiding volatility in future spending, as much as possible. In spite of the presence of other arrangements are possible to avoid the volatility of prices and then oil revenues as measures of hedge hedging in the international financial market as well as mutual funds to stabilize prices for groups of countries producing raw materials, the international experience common now and in the most oil-producing countries is to configure and use the reserve funds of oil. This is the subject of the next paragraph.
III: "Oil Reserve Fund
To demonstrate the importance of having an account or fund which maintains a budget surplus is appropriate, for the purpose of description, an interview and compared between the net balance of payments and the net budget. In the balance of payments which records all receipts of the state and foreign currency payments, in a given year, if the increased receipts of payments on the difference (surplus) go to the account or fund called foreign currency reserves. This account is managed by the Central Bank published its score each year, "There are rules for the management and use. As the most saves in the short-term deposits abroad, it will yield a "well." The important point here is that this account has known the rules of use, control and audit. When the increase of receipts of payments of foreign currency in a given year are usually resort to several measures to finance the deficit, including withdrawals of foreign currency reserves and / Oaloguetrad the outside. In the case of the budget in Iraq, there is no account or fund a clearly defined budget surpluses are kept. When actual revenues to increase spending as happened during the period 2004-2008 and 2011, there is no similar fund or account into which these surpluses and publish data on its assets as reserves in foreign currency. All we know on the status of the accumulated surplus is a "circular cash from the previous year's budget," which are contained in the budget law each year. Of course, the accumulated surpluses are kept in the accounts for the benefit of the Ministry of Finance Central Bank of Iraq or the Iraq Development Fund, Development Fund of Iraq, DFI. However, these calculations do not publish what it refers to the size of the surplus or about the way his administration and how to dispose of and follow-up and accountability management.
Therefore, it is appropriate to change this reality. In most oil-producing countries there is an account or fund budget surplus goes to him and decides to methods of management, investments and regulatory requirements for follow-up and accountability. It is subject to parliamentary control and non-parliamentary and publishes its assets each year, "added so that you know him and drag him. Perhaps the oil reserves funds that have spread in most of the oil the best proof of the importance of this subject. The leave it to the published accounts of the Ministry of Finance does not serve the transparency and good management accumulated surpluses. It may be recalled that the Minister of Finance and Central Bank Governor in a letter of intent [iv] sent to the Director-General of the International Monetary Fund on 3 March 2011 a male intention to re-build a "financial stocks financial buffers" to preserve the surplus part of 2011. But the message did not specify what these stocks and whether the intention to make it a reserve fund or accounts remain of the Ministry of Finance. Then is the entity that will be managed and monitored and Torteuralah added to it and draw from them?
It is noteworthy that countries differ in the mechanism of addition and withdrawal of funds. For example, in Norway is added automatically to the budget surplus reserve fund (Government Pension Fund Government Pension Fund-Global). In Chile, Libya is to predict the price of oil before the beginning of the budget and called on the price predicted by the "reference price". At the end of the budget is added the difference between the price of the reference price and accrued to the Fund. In Kuwait, Alaska and Alberta deduct a percentage of revenue from "and add to the fund. The drag varies depending on "the different institutional frameworks, but they are all" used to finance the budget deficit. [V]
IV ": the annual horizon and the longer the horizon
The absence of an economic perspective / Mali serious medium and long-term in Iraq raises the question of the sustainability of the current fiscal path and increase the probability of falling in future crises shown by experiences in Iraq and in other oil countries. The exclusive perspective in the development of the annual budget, particularly for capital spending and lack of interest in long-term sustainability of oil revenues is a clear case of absence of proper planning.
Budgeting has become a medium / long-term is necessary to secure to avoid future crises. Organized in terms of this budget current expenditure and investment on the one hand and the resources required on the other hand, a future perspective appropriately, so that it can pave the volatility of expenditures in concert with the rise and decline of oil revenues. We have taken various countries, especially the oil by following this exercise. Authorities have recognized the financial / cash in Iraq this matter and has promised to his followers in the "letter of intent" referred to above. However, what may hinder the application could be in Iraq now total of the following:
• Absence suggests a look at medium / long term with the Ministry of Finance.
• The National Development Plan 2010-2014 released by the Ministry of Planning does not contain the criteria and process indicators are useful for the organization of current expenditure and investment for the medium term. The one hand, investment expenditure plan contains a total (and the amounts of sectoral) for capital spending for the plan period and there is no list of projects (and mandated and timing) in the plan so that you can budget to guide medium-term. The truth is painful, since the 1976-1980 plan was abandoned for the inclusion of a list of projects in the plan document. This error was repeated in succession "after that and also repeated" in the Plan of 2010-2014. Nor is there specific steps to implement policies and timing of implementation and those responsible for them. This means that the National Development Plan is a document without the means and practical policies and projects for implementation. [Vi]
• There is no long-term perspective agreed for production of oil or oil revenues. This is worthy of observation. The most important principles of economic / financial sound in oil country is to try to diagnose Almsaralmtouka oil revenues for the time span between 20 and 25 years old. Such a path allows formation of so-called roof / ceilings oil resources, resource ceilings or envelope. This allows in turn determine the spending ceilings that comply with these (plus "non-oil resources), sustainable spending any sustainable. Thus, the deposit can be differences between the annual returns and actual expenditure sustained in a reserve fund if the oil resources of the largest sustained spending and do to fill the shortage (or most) of the Reserve Fund if the opposite happened. In Iraq, there is no clear vision for the future is not a serious attempt to create an oil reserve fund. Doing this exercise is not aimed Commitment numbers ceilings literally "formation, but a general framework and indicators are useful for predicting future crises and to avoid them as much as possible.
• And perhaps explains the lack of interest in this general sense is that Iraq is on the verge of a major oil production and that future returns will be more than enough without the need for planning. Such a view is productive because it leads to waste and access to adoption lead to serious consequences when oil prices collapse or fall production / export.
V ": the deficit and its financing
A deficit of 14.8 trillion dinars in the 2012 budget component "of about 12.6% of the spending power allocations. After determining the allocations, the most important reason for this deficit is due to the size of oil revenues. It has estimated oil revenues at a rate of $ 85 a barrel and export 2.6 million barrels / day. This compares with the $ 105 price and export 2.17 million barrels / day in 2011. The use of 2.6 million barrels / day in the calculations seem reasonable. " In an interview with the website Iraq Oil Report on 9 December 2011 The Minister of Iraq's oil production (and hence export) of oil in 2011 was less than energy production, although it set a production which is the limited energy export facilities. He said that the work underway to increase the export capacity to an average of 2.6 million barrels / day in 2012.
On the other hand, the use rate of $ 85 a barrel in the calculations may be conservative. " Although the reservation requires careful and proper planning but the presumption of low price of twenty dollars in 2012 for 2011 could include Xia, "an exaggeration. [Vii] Despite its reference to the uncertainty the great surrounding prices, outcome expectations that are available do not see the likely" significant "to lower prices in 2012 the 2011. The Department of Energy Information Administration EIA expects to drop in 2012 to increase the price of West Texas crude of 95 dollars per barrel in 2011 to $ 100 in 2012 (with the knowledge that the average price of Iraqi oil was higher than the price of West Texas in 2011). The drop and the International Energy Agency IEA annual report in November 2011 it is likely to rise in oil prices in the "short term". On the other hand on the reserving party, the drop OPEC annual report in November 2011 assumed a range of prices between $ 86 to $ 96 a barrel during the decade beginning in 2012. [Viii] In light of this becomes expected price of a barrel of oil highest price that made obligatory budget 2012 ($ 85) justified "and becomes a deficit estimated by the exaggerated" it.
I've mentioned the budget bill for 2012 that one of the sources of funding the deficit will be "recycled the cash balance of 2011." But what is the size of the circular cash balance of 2011? Here we face the problem that we have mentioned previously, "a lack of official data on the accumulated surplus (cumulative) since 2003 until the end of 2011. But with the available data in the report of the consultations the fourth paragraph of the IMF with Iraq in 2009 show that the size of the budget surplus accumulated total in the end of 2009, 11.7 trillion dinars. [Ix] The report of the consultations for the year 2010 shows that the budget achieved a surplus in the first half of 2010. [x] On the other hand, the 2011 budget stated that the sources of funding for a projected deficit would be "critical round of the 2010 budget." All this means that the accumulated surplus at the end of 2010 were positive. If we add to the budget surplus achieved at the end of 2011 and which we value as shown in Table (1) above by more than 8 trillion dinars shown that in the end of 2011, the aggregate of the surpluses of the budget (in the accounts of the Ministry of Finance and / or fund the development of Iraq's DFI) may range between 8 to 20 trillion dinars. This means that the Ministry of Finance will most likely will not resort to borrowing, whether from the central bank or other banks or from the International Monetary Fund. However, the uncertainty of the volume of accumulated surplus or rules of use make this prediction is subject to the same uncertainty as well. "
VI: "Kuwait war reparations and foreign debt servicing
Iraq pays an annual "5 percent of its oil exports to pay war reparations Kuwait. And deduct the annual payments starting "before the deposit remaining in the Iraq Development Fund, DFI. You have reached the compensation which was ratified by the United Nations Commission on Compensation of about 52.4 billion dollars. At the end of 2011 amounted to 35.1 billion of which hit countries and the remaining 17.3 billion. It is noted from the table (1) that is allocated for compensation in 2011 of 3.59 trillion dinars. However, the actual amount of the payment of 4.85 trillion dinars (4.1 billion dollars). The reason that this variation compensation, representing 5% of oil exports which were estimated (ie, the value of exports) in the 2011 budget a low level compared with the value already achieved. " What we will pay for compensation in 2012 will be higher than the ad hoc (4.7 trillion dinars or 4.0 billion dollars) when oil prices rise for those on which the accounts of the budget 2012.
On July 1, 2011 began servicing external debt as well and will continue for 28 years until mid-2039. Unlike the amount of compensation is not available accurate information on the total amount of foreign debt on Iraq, despite the passage of nearly seven years to limit the indebtedness. The uncertainty about the total debt situation stems from the Gulf. And familiarized themselves with the reports of the consultations the fourth paragraph of the International Monetary Fund annual with Iraq, notes the existence of clear figures on the Paris Club debt and commercial debt and debt is the Gulf, especially after the expiration phases reduced in 2008/2009. But because of the uncertainty of the debt of the Gulf there is no clear number for the total debt. Although debt is not resolution of the Gulf-mentioned reports of the Fund continue Assuming that debt reduction Gulf will "" in the coming year. " And when it does not get paid to be the year that followed, and so on. For example, in the 2008 report of the consultations mentioned in p 30 that the total external debt was $ 102 billion at the end of 2007 and will become a 32 billion at the end of 2008 and 33 billion at the end of 2009. But in the 2009 report of the consultations mentioned in p. 61 that the total in 2009 is $ 137 billion and it will become 47 billion in 2010. In a report consultations 2011, which was released in March stated in page 25 that the total external debt at the end of 2010 is $ 107 billion and will be 37 billion at the end of 2011. But 2011 did not reduce the debt has passed the Gulf.
The uncertainty that this has to be hit too. "Budget figures. Noting from the table (1) that was allocated to external debt service amounted to 3.32 trillion dinars (2.8 billion dollars) in the budget of 2011 and 4.65 trillion dinars (4.0 billion dollars) in the budget of 2012. As the debt service (interest and the parent) depends on the size of the debt (interest rate), it is difficult to know the size that was calculated on the basis of these customizations.
It has been proved that the interest rate is calculated on the basis of debt service, in advance, "the level of 5.8 percent. The fixed rate of interest has advantages and disadvantages. It increases when inflation tends to raise the different countries where interest rates. Thus, the installed price is useful. " But at the present time which is approaching the interest rate on the dollar from the ground up and in light of the efforts to revive the world's various economies, it is not expected to raise interest rates in the foreseeable future. This seems to interest rate used to calculate the debt service on the high-Iraq "very" now ".
Seventh ": the budget and inflation
It has been inflation in the years before 2008, a function of the security situation and the concomitant shortage in supply of commodity, especially in fuel and petroleum products. This is in addition to imported inflation, particularly food price inflation. Since 2003, played in fuel prices play a "key" to the escalation of inflation until the year 2007 (extreme tightness in the fuel) and then in the reduced, then, when the improved security situation and took action to change the fuel prices and procedures to increase the display. [Xi] The rate of inflation about 35.9% a year, "during the period 2002-2007, falling until it reaches the negative inflation (rate of decrease in prices) rate of -2.8% in 2009 and then rise moderately to 2.2 in 2010 and to 5.5% in 2011. Table (2) the development of inflation (as is the relative size change of consumer prices) since 2003 and the contribution of the various paragraphs of spending it.
Table (2) inflation in Iraq and the contribution of the paragraphs of the spending
The contribution of the paragraphs of spending in inflation
Annual inflation rate,%
Source: Calculated from indices of consumer prices, the Central Bureau of Statistics. Compound annual rate of inflation for the period 2003-2007 calculated between 2002 and 2007.
Note: Before 2010, comparisons between the figures, standard base 1993. Since 2010 and the comparative merits of 2007. Please note that the Central Bureau of Statistics provides figures Balosasin 2009.
The period 2008-2011 was characterized by moderate inflation did not play a role in pressure demand "substantial" in pushing prices upward. Perhaps the most important indicators of the degree of change in pressure demand, especially investment, is to change the size of the prices of services such as transport, transportation, rent and other services. During this period, as in previous periods, the impact of changing prices of services (covered in another paragraph in the table 2), except for rent, a moderate, "but it was negative" in 2009. The increase of the relative importance of change rental rates since 2003 in inflation as seen from the table, they go back to the security situation and schizophrenia (segmentation) real estate markets rather than the impact of demand pressure. It was a change in the main paragraphs in consumer prices during the period 2008-2011, as in the previous period, is the fuel, rent and food.
Indicates moderate rate of inflation during the last four years that the determinants of absorptive capacity has not been overcome despite the rise in public spending in the budget. In the relatively stable security situation, "the most important indicators of access to or overcome the limits of the capacity is the first" accelerated the rate of inflation, and secondly, "the acceleration rates of the services. Both are still moderate "relatively."
But that may not last long, "especially when Tssttb security situation and unite some markets sheared from each other now," (a market the property) so that it can be returned to the experience of the seventies of the last century. The growing volume of expenditure and the arrival of the annual appropriations to 117 trillion dinars in the budget of 2012 and the official statements of wanting to implement investment projects more quickly than the former, as well as the start of oil investments in various parts of Iraq could lead to an escalation of the degree of demand pressure. This must be cautious in this area through serious planning to break bottlenecks occur as soon as through the working groups coordinating between ministries, regions and different regions, especially in points of import and export, ports, roads, etc.. It should AWAY FROM statements of intent and announced the start of "explosive Plan" and bearing the new lack of interest in the content of potential bottlenecks. What has happened in the explosive plan for the seventies of the last century was to unleash all kinds of investment and current expenditure at the same time Altmahl Removing bottlenecks in quickly and seriously. Has exacerbated the situation, then maintain protection of quantitative and administrative restrictions on the conversion of foreign currency and import restrictions on private sector activity. It must be attention that Iraq is a task not have access to the sea and this is what leads to amplify the bottlenecks. This is unlike countries that have free ports can be used to break bottlenecks ports and equipment from abroad.
VIII ": government use and rent-seeking trap
The most important aspects of a rentier economy is the magnitude of government use. Is the predominant form in the oil-producing countries especially Iraq, Libya, Algeria, etc.. So that the volume and the proportion of government use in total use in the oil states is the most important and most difficult traps rentier that occurred in these countries. In Iraq it is in addition to conditions imposed rent increase, the state now operating based on the achievement of social peace and to satisfy the opposing groups and communities through the various amplified this use. In addition, the preservation of descent Mahassah in use at many levels of government contribute effectively to the increasing number of users of the state. In addition to 2.75 million users in the state budget of 2012 will add 59 000 others. In successive years will increase public pressure to increase government use in greater numbers.
Therefore, it is not expected to solve this problem in Iraq for the foreseeable future. The bulk of what can be done now is to look at the credibility of the government use numbers and verify the presence of persons employed. As it is believed that there are false names of the categories may receive a salary from several sides. It turns out this is also "in a country other oil.
IX ": subsidies and poverty
In a survey conducted by the Central Bureau of Statistics on poverty in 2007, the results show that the poor represent about 23% of the total population in Iraq (ie, those who are below the "poverty line"). [Xii] No data are available on the proportion of the poor for years later. There are some reasons to doubt the applicability of this ratio at the present time. As noted earlier, "the number of people receiving income" from the state is now the salaries or social benefits may include most of the Iraqi families. As the allocations of salaries and social benefits in the budgets of 2011 and 2012 amounted to 41.5 and 48.8 trillion dinars respectively [xiii] (35.5-41.7 billion dollars). And even with a significant degree of disparity in salaries of public subsidies and the spread of corruption, the rate of income from these customizations (including ration on volatile) is able to satisfy much of the required minimum number of calories of food for most individuals. This minimum is, by the way, the basis of estimating the poverty line, which was built on the basis of the proportion of people below the poverty line in 2007. I also believe that "there is exaggeration in estimating the poverty line, the same in 2007. The reason for this belief is the use of survey that year for a minimum amount of calories 2337 kcal / person / day. This limit is the one who decided the poverty line. What is commonly used in the estimates of the poverty line of less than that and up to 2000-2100 kcal / person / day. Therefore, the use of these limits will reduce the proportion of the population below the poverty line.
However, data show poverty to the survey mentioned that parts of Iraq are different in terms of the proportion of the population below the poverty line. In the three provinces, Kurdish, which was characterized by a high degree of security compared to other parts of Iraq in 2007, the proportion of the population ranged from below the poverty line than 3% in Irbil and Sulaymaniyah to 9% in Dohuk. But in Baghdad, the percentage reached 19% to jump to 40-41% in Salaheddin, Babil and 49% in Muthanna.
The allocation of subsidies and rationing in the budget involves the need to solve the dilemma of thoughtful and careful. The Continuing subsidies and the distribution of rations to prevent the aggravation of malnutrition in the past. But the other side of the dilemma is that the corruption and smuggling exhaust part, "regardless" of the ration, leading to the loss of does not benefit the poor and carries the burden of the budget "increasingly. So must study how to distribute subsidies to eligible applicants already. " If the ration can be converted to the benefits received by Msthakoha actually "either coupons or direct cash payments to eligible, this solution is suitable if it avoids corruption and loss without the negative impact on the beneficiaries.
X. ": the federal budget, regions and areas
Because of lack of clarity in the relationship between interactive and Federal Ministry of Finance and financial authorities in the regions in the preparation, implementation and follow-up budget (interaction from top to bottom and vice versa), this paragraph are more questions and inquiries, including an analysis "of the reality known.
There is an overlap in the role of the federal Ministry of Finance as an institution and the role of different regions and the Kurdistan region. This is a reflection of overlap in the Constitution (for example, Article 114). There are national projects carried out by the federal ministries and projects of regional and zonal carried out by local authorities. According to the material (112 121 and 125) of the Constitution distributes oil revenues to the regions and districts according to population. We have introduced the so-called Balbtrodolar It represents additional financial allocations in the budget for areas producing oil and gas and refined oil. Any addition to the allocations according to population. There are also allocations for the development of the regions funded by the federal treasury. It is not entirely clear "how is the report of the allocations in the budget is actually" to be bound by all these rules and laws. In the absence of evidence and instructions published and known as well as in the absence of a plan and a clear national plans and regional and zonal comes to perhaps become a "bargaining power of regions and the various political groups. Perhaps the clearest case is the bargaining power of Kurdistan, where they receive a share amounting to 17% of the budget and it appears to decide current and investment expenditures. In other areas, there is no known specific rules about how to act and decide Pt_khasasatha distributed among the various paragraphs spending power. It also raised questions about the local resources of the regions and how they are being disposed of and what is the role of the Ministry of Finance in the formulation and implementation of local budgets? The lack of clarity in the form of the relationship the federal / territorial levels and low technology may lead not only to the modest implementation, control and efficiency, but to the spread of corruption, financial and technical support.
Eleventh: budget preparation, implementation, monitoring and evaluation and dissemination
Although allocations for college expenses equal to one hundred billion dollars in Iraq, the budget is the methodology and techniques and methods are not clear to the outside observer. There is no evidence of manuals, handbooks published on the official documented ways and stages of preparation and institutional deliberations and the final wording. It is not known the existence of programming of the timing of implementation of various paragraphs of the current expenditure and investment and to ensure availability of cash or bank credit for implementation. If we compare this situation balance sheets of some Arab states that the volume of expenditure allocations which is much less than in Iraq, where budgets are issued in different classifications in a coherent and consistent. In addition, these countries took the budget to include criteria for follow-up and timing for implementation of the various paragraphs of the budget. This is in addition to banking regulation mechanism for the provision of cash or credit at the time needed by stakeholders to implementation. All through institutional finance / banking and using an electronic mechanism. Also extended it to include some budget indicators for the evaluation useful to follow up the effectiveness of expenditures and the extent of their access to target groups.
With the exception of what is leaking for some or all of the schedules, the draft budget, in Iraq, eclipsed from circulation until formally ratified the Council of Representatives and pass to ratify have plenty of time. Which is available after the expiration of this period is the budget bill that contains less information, instructions and without the attached tables. And when that law shall be published in the Rules section on the website of the Council of Representatives. As for what is available from the Details section of it were allowed at the site of the Ministry of Finance coordinated schedules is as close as to be non-consecutive drafts and in some cases passing through the "gap from the pages do not exist.
The continuation of the prevailing methods in the preparation and discussion, implementation and evaluation leading to low efficiency and lack of transparency. The large size of the expenditure involved purchases of government and large contracts will be given room to "widespread" corruption in the absence of details and rankings are interrelated and help to clear up and control. So it should work on the preparation of technical staff Muqtadir to do to prepare the budget through the benefit of sophisticated institutional standards and international applications. For example, Iraq's commitment to apply the methodology, "Government Finance Statistics Manual GFSM 2001" [xiv] in government accounting requires the progressive "to achieve a clear interview between budget categories and classifications contained in this directory. Should be provided as well as sections that run on the budget following the publication of volumes and made available to professionals and citizens of the authors' interest in real implementation of the budget the highest possible efficiency.
Thanks: I would like to thank all of the d. Dr. Fadhil Mahdi. Superficial inch to review the article and providing helpful suggestions to improve it. I also thank d. Superficial on the graph at the beginning of the article.
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Paragraph 1 beyond salaries, subsidies and social benefits in the budget of 2012 (41.7 billion) the size of the gross domestic product (GDP) for Tunisia in 2008, which amounted to 40.2 billion dollars. GDP derived from Tunisia:
UNDP (2010) Human Development Report 2010.
[Ii] reported the size of the Iraqi family in the two surveys are both issued by the Central Bureau of Statistics' survey of living conditions in Iraq 2005 "in Arabic and" Economic Survey / Social IHSES-2007 "in English. The total household size 6.8 people in the first survey and 6.9 people in the second survey.
[Iii] in one of the following paragraphs of the source covers the behavior of oil prices until 2010. Have you update period for the purpose of this article until 2011 (with respect to oil prices, nominal).
Merza, A. (2011), 'Oil revenues, public expenditures and saving / stabilization fund in Iraq', International Journal of Contemporary Iraqi Studies 5: 1, pp. 47-80, doi: 10.1386/ijcis.5.1.47_1.
[Iv] See: IMF (2011) Iraq Second Review Under the Stand-By Arrangement, Requests for Waiver of Applicability, Extension of the Arrangement, and Re-phasing of Access-Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Iraq, IMF Country Report No. 11/75, March.
[V] See: Merza, A. (2011), Op. cit.
[Vi] Ali Mirza (2011) "Notes on planning in Iraq: the institutional structure and functions," Journal of Economic Studies, the House of Wisdom - Baghdad, No. 25.
[Vii] The entry of Libya for the export market in 2011 after interruption could lead to lower prices, but not to the extent set out assuming the accounts of the budget 2012. On the other hand, the escalating crisis with Iran and then the possibility of confrontation in the Persian Gulf could lead to an escalation of prices. But on the other hand may lead to the interruption of export through the Gulf.
[Viii] the following sources, in turn, "the U.S. Energy Information Administration and the International Energy Agency and OPEC:
US Energy Information Administration (2012) Short ‐ Term Energy Outlook, January.
International Energy Agency, IEA (2011) World Energy Outlook 2011, Executive Summary, November.
OPEC (2011) World Oil Outlook 2011, November.
[Ix] See: IMF (2010) Iraq: Staff Report for the 2009 Article IV Consultation and Request for Stand-By Arrangement, Report No. 10/72, March, Page 9.
[X] See: IMF (2010) Iraq: First Review Under the Stand-By Arrangement, Request for Waiver of Non-observance of a Performance Criterion, Waiver of Applicability, and Re-phasing of Access, Report No. 10/316, October, Page 3.
[Xi] See: Merza, A. (2010), "Fuel Prices and Inflation in Iraq: The Rise and Fall of a Supply Shock", Middle East Economic Survey, April.
[Xii] Central Bureau of Statistics and Information Technology (2009) report the poverty line and the features of poverty in Iraq, the Ministry of Planning and Development Cooperation, Baghdad, March, page 11.
[Xiii] As noted previously, "equal to each of these two figures, in the year concerned, the total salaries and pensions plus" 75% of the paragraph subsidies, grants and social benefits in a table (1).
[Xiv] See: IMF (2001) Government Finance Statistics Manual 2001, Washington DC.
* D. Mirza Ali previously worked "in the ministries of oil and the Iraqi Planning and as chief advisers in the Department of Economic and Social Affairs of the United Nations.
Sources and margins
Paragraph 1 beyond salaries, subsidies and social benefits in the budget of 2012 (41.7 billion) the size of the gross domestic product (GDP) for Tunisia in 2008, which amounted to 40.2 billion dollars. GDP derived from Tunisia:
UNDP (2010) Human Development Report 2010.
[1] reported the size of the Iraqi family in the two surveys are both issued by the Central Bureau of Statistics' survey of living conditions in Iraq 2005 "in Arabic and" Economic Survey / Social IHSES-2007 "in English. The total household size 6.8 people in the first survey and 6.9 people in the second survey.
[1] in one of the following paragraphs of the source covers the behavior of oil prices until 2010. Have you update period for the purpose of this article until 2011 (with respect to oil prices, nominal).
Merza, A. (2011), 'Oil revenues, public expenditures and saving / stabilization fund in Iraq', International Journal of Contemporary Iraqi Studies 5: 1, pp. 47-80, doi: 10.1386/ijcis.5.1.47_1.
[1] See: IMF (2011) Iraq Second Review Under the Stand-By Arrangement, Requests for Waiver of Applicability, Extension of the Arrangement, and Re-phasing of Access-Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Iraq, IMF Country Report No. 11/75, March.
[1] See: Merza, A. (2011), Op. cit.
[1] Ali Mirza (2011) "Notes on planning in Iraq: the institutional structure and functions," Journal of Economic Studies, the House of Wisdom - Baghdad, No. 25.
[1] The entry of Libya for the export market in 2011 after interruption could lead to lower prices, but not to the extent set out assuming the accounts of the budget 2012. On the other hand, the escalating crisis with Iran and then the possibility of confrontation in the Persian Gulf could lead to an escalation of prices. But on the other hand may lead to the interruption of export through the Gulf.
[1] the following sources, in turn, "the U.S. Energy Information Administration and the International Energy Agency and OPEC:
US Energy Information Administration (2012) Short ‐ Term Energy Outlook, January.
International Energy Agency, IEA (2011) World Energy Outlook 2011, Executive Summary, November.
OPEC (2011) World Oil Outlook 2011, November.
[1] See: IMF (2010) Iraq: Staff Report for the 2009 Article IV Consultation and Request for Stand-By Arrangement, Report No. 10/72, March, Page 9.
[1] See: IMF (2010) Iraq: First Review Under the Stand-By Arrangement, Request for Waiver of Non-observance of a Performance Criterion, Waiver of Applicability, and Re-phasing of Access, Report No. 10/316, October, Page 3.
[1] See: Merza, A. (2010), "Fuel Prices and Inflation in Iraq: The Rise and Fall of a Supply Shock", Middle East Economic Survey, April.
[1] Central Bureau of Statistics and Information Technology (2009) report the poverty line and the features of poverty in Iraq, the Ministry of Planning and Development Cooperation, Baghdad, March, page 11.
[1] As noted previously, "equal to each of these two figures, in the year concerned, the total salaries and pensions plus" 75% of the paragraph subsidies, grants and social benefits in a table (1).
[1] See: IMF (2001) Government Finance Statistics Manual 2001, Washington DC.
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Last edited by deniscanada on Tue Feb 14, 2012 3:14 am; edited 1 time in total (Reason for editing : added pic)
