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Preventive deficit in the federal budget: the capacity of the government in the tunnels and dynamic optimization Almthbttat
05/25/2011 10:49
Appearance of Dr. Mohamed Saleh
Adviser to the CBI
We have taken the Iraqi finance model recently in building the financial policy of our country depends signal strength percentage of actual revenue to GDP to reflect the right about the capacity and optimize the installer dynamic "1" which explains in the target which the Government can influence the growth rates of gross domestic product. In other words, , the point fitness between the expansion of the government or the capacity of its impact on economic life and the power and capacity of the installed dynamic, which is alone capable of the greatness of the government and its influential role in the economy, they have to lead to the formulation of point optimal for economic stability and pointing the role of fiscal policy in that the desired stability and the holy for growth and economic development. If Maarafna that the percentage of overall revenues, the actual to GDP, estimated in the federal budget for 2011 by about 41%, although the limits of public spending to GDP rises are the other to about 54% to show the capacity of the government also and its role in economic activity for the country, the choice of the ratio of income to GDP is the relevant indicator and the strongest in modern financial literature to determine the capacity of the government and evaluate the results of stability of fiscal policy based on the principle of automatic without discretionary intervention and installed according to the selection of dynamic determined by the ratio of public revenue to national income. But in our country's economy which depends the general budget when the oil revenues by about 88% -90% (excluded government loans and various forms of public debt), the effects and cyclical fluctuations that are imposed on public finance Iraqi require the adoption of installed dynamic strength average price for a barrel of oil for purposes of determining income budget ratio to GDP, a price less than the price of a conservatory barrels of Iraqi oil sold in the global market based on the OPEC basket of about $ 10 on market prices prevailing in the world. In other words, being designed revenues (over expenditure) based on the inability of preventive or protective based on the difference between the prices achieved in the global market and oil prices, the default (conservative), approved in the planning of the public budget. Preventive and disability pay to hedge also to finance the deficit is likely sources of Aiardip represent diverse in the area of revenue collection, particularly borrowing from the domestic financial market and / or the international financial market.
Of the foregoing, the adoption of a barrel of oil source of $ 73 to assess the revenue budget for the year 2011 and an average export of 2.250 barrels of oil per day (offset by the trends that is sold Iraqi oil in the world market at the present time, amounting to nearly $ 83 a barrel).
If the prices of oils Mattabguet Iraq exported with the actual world market price and the attainment of the objectives of export amounts referred to in the above, the installer will generate a dynamic convergence of resources precautionary than 8 billion dollars, or perhaps more.
And that this extra precautionary resource which comes installed by the dynamic counterweight would be financially fiscal buffer no matter which is suspended in the bumper of the course on financial tool that is installed in the management of dynamic financial Katr of the public budget to recognize and avoid danger. The Stmathl resources bumper financial deficit estimated at 14 trillion dinars to end the budget to a balanced budget. And then avoid the country's burden of borrowing, as well as avoiding the problems of uncertainty resulting from the impact of changing the external price of the oil market on overall economic activity, which Twhran oil prices and quantities of production and exports had reached their goals, according to data the international market and the capacity of the country's productive and export capacity. At this point, fiscal policy is at the point of fitness to combine the capacity of representative government spending power to its goals of economic, social, and choose the installer Bsath dynamic and highly desirable to achieve a balanced budget.
There the question is, whether designed for the general budget deficit and a preventive and installed a dynamic and well known, but it ends with a surplus of Mali? What this means in effect surplus in the state of growth and economic development in our country?
Although the sources of the surplus in the general budget, which, however, result in the adoption of installed dynamic high hedge is by oil revenues, reserving to the GDP, but it represents a positive attitude in the design of fiscal policy and keeping a distance from the expansion is secured in revenue, which depends potential volatility because of the nature of the oil market and Majrib to maximize the risk budget (risk to meet the return), Alain the surplus is at the same time a counterweight financially fiscal buffer is used to assign and support the planning and the dynamics of public budgets for subsequent years and Ieparvi the same time resources in the stabilization fund is a quasi-sovereign wealth fund, where it is known that our country had ended in 2010 with a surplus precautionary reached nearly 12 trillion dinars. "2"
Which means he could be re-planning the budget for the development of the limits of optimal balance in 2011 between total spending and the accumulation of surplus towards the precautionary lead to macroeconomic stability and contribute to reducing unemployment and supporting economic development trends, as desired. And Mkhatrtrakm this surplus from outside the installer dynamic in our country, stresses often as a financial resource alone annual used to it public budgets without the availability of matches real assure Amehal that there is a weakness in the management and implementation of the general budget, in particular investment, including, as it did not exceed the rates of physical implementation of investment projects-governmental organizations 25 % and may increase the financial implementation of 45% except for the oil sector in the past two years.
As I have, alas, the data collected in recent months of the year 2010 facts represented by the accumulation of large financial resources of the central government and the public sector together amounted to approximately 31 trillion Iraqi dinars and distributed between the central government by 11 trillion dinars and the public sector by about 20 trillion Denargariba.
Accordingly, the proportion of cash flow from current income-qualified federal budget for 2011 and recyclable an asset cash amounting to about 43 trillion dinars and the proportion of 46% of the total public spending of 93 trillion dinars, the equivalent in any case more than three times the deficit precautionary in the budget year Almekdrbhawwali 2011 and 14 trillion dinars.
To hide the phenomenon that our country live overriding free ride to the maximum extent possible as it did not increase the contribution of individuals in the general revenues such as taxes, fees and other 100 thousand dinars per capita, while per capita amounting to nearly 3 million dinars from the budget expenditures of the college.
Conclusions
Our country is in dire need for the availability of an executive efficient, has the ability and flexibility in the implementation of the investment budget of $ 32% of the total public expenditures and close to 20% of the gross domestic product, which is acceptable according to standards prevailing global investment, and if we add the contribution of the private sector in total investment Let 10% of that output, the growth rates in GDP of the country would approximate 7% other words, the per capita GDP of $ 4443 now will double within ten years to reach in a timely manner nearly 10 thousand dollars per capita or less purchasing power current.
If it happens this percentage of the total investment of 30% of the gross domestic product instead of the bumper Aktnazha financial surplus which will be backed by
Oil investments and rates of desirable and targeted production amounted to three million barrels of oil per day in 2011 and reach export target of 2.25 million barrels a day, it could raise the rates of growth in gross domestic product to the target in the development plan for the years 2010-2014 of 9.4%.
Accordingly, our country is not need to borrow at this stage, but Bhajpaly hedge in the collection of loans can be accessed in the event that the installer dynamic may fail to the level of the Ewald balance the budget and deficit precautionary or preventive equal to the real deficit is the phenomenon of sub-optimal sub optimal, but indicate high efficiency in planning and implementing the general budget.
Noting that the installer dynamic to the extent that helps the potential to reduce the deficit Preventive gradually until canceled when achieving a balanced budget, but that in the case of surplus, that is installed in spite of his spontaneity, he could not provide sufficient capacity to reduce the volatility of positive saving of the surplus at this time in the interest of strengthening the power and the activity of the general budget and the transfer of the surplus off the priorities of the objectives of maximizing the capacity of the government in terms of spending power to achieve economic and social targets of the budget, which requires government intervention and any change in intended in the fiscal policy and other policies inherent in the investment and activation of development projects that are on the waiting list restricted disability precautionary expenditure ceiling specified (Kalmoaznat complementary investment and capacity to adopt and implement immediately).
Finally, probably wondering the center of financial and economic order in our country about the importance of the availability of 43 trillion dinars in cash in excess of the budgets of previous years and grouped in bumper financial fiscal buffer at a time when the country to the unemployment rates effective up to 18% of the labor force and rising to 28% of work force young people and our country in 2010 did not achieve the growth rates in gross domestic product, only 3.8%, according to optimistic estimates, or perhaps much less.
At a time not exceeding the per capita share of infrastructure, energy, material produced only less than 20% of the share before the outbreak of the Iran-Iraq war, and most scored, revenues in the budget of years past were caused by increases in rents generated by the oil markets did not come from any productive capacities concrete extractive industry, but the little bit, and that record oil production on the basis of 2005 amounted to $ 100 in July of the year 2010 approximately 118.5%, according to the statistical bulletin of the International Finance International Monetary Fund in September of last year.
To hide the phenomenon that the growing surpluses in the budget caused by the weak implementation of investment projects means that out of respect for saving investment that leads to frustration, which leads to a fall in the future savings due to the deterioration of the same income levels, a so-it irony prosperity paradox of thrift in the Keynesian literature.
Accordingly, the policy makers of Finance said they wanted an inquiry is always in our economy of one side of the ratio of fitness between the maximum capacity of the government of increased spending to GDP or revenue to GDP, and between the maximum capacity of the stabilizers dynamic selected, both of which they have to achieve stable level of gross domestic product, according to the goals Altnmoipalaguetsadip and social development of Iraq's federal budget. Promised that the target of the objectives of the country's development program for the next five years.
Footnotes:
"1" studies tend to adopt the current fiscal stabilizers dynamic as it is called automatic stabilizers are characterized by the adoption of measures about the financial authority to intervene through the diligence of the Movement of the budget to be replaced by other measures in the financial policy function more automatic or automatic. Thus, it is something of relationships that can reduce cyclical fluctuations in the economy without the direct intervention of the government, to intervene, which often leads to a slowdown between the need for the role of something in the fiscal policy and the actual commencement of the application of this policy, which consists usually of three Tbatwat the most prominent of the slowdown in the realization problem and the slowdown in the design and then slow down to take the necessary action is slowed down by the so-procedure inside lag. On this basis, represent the general budget, the specimen is installed for the application of the above mentioned any dynamic determine the percentage of overall revenues to the total output of the country. Declining GDP, for example, would lead to Amehal to cut income taxes of direct and indirect, etc., and when you rise in unemployment to be spending that increases and in turn lead to higher budget deficit. And vice versa reduced the deficit with increasing GDP.
"2" when the price of Iraqi oil source income to the federal budget for 2010 of about $ 62 a barrel, Iraq sold Nfoth in the international market at an average price reached $ 73 a barrel, and achieved a surplus of more than 12 trillion dinars in the budget at the end of the year, despite the fact that export daily oil has not reached its planned budget of $ 2.150 it reached about 1.9 million barrels per day source. However, rising prices have exceeded the impact of the rate of decline in export target, which offset lower volumes exported through higher prices of oil exports that exceeded the actual planned in the budget by about 17%, while exports declined by about 8%.
Sources
See:
Draft federal budget law of the Republic of Iraq for the year 2011
[You must be registered and logged in to see this link.]
05/25/2011 10:49
Appearance of Dr. Mohamed Saleh
Adviser to the CBI
We have taken the Iraqi finance model recently in building the financial policy of our country depends signal strength percentage of actual revenue to GDP to reflect the right about the capacity and optimize the installer dynamic "1" which explains in the target which the Government can influence the growth rates of gross domestic product. In other words, , the point fitness between the expansion of the government or the capacity of its impact on economic life and the power and capacity of the installed dynamic, which is alone capable of the greatness of the government and its influential role in the economy, they have to lead to the formulation of point optimal for economic stability and pointing the role of fiscal policy in that the desired stability and the holy for growth and economic development. If Maarafna that the percentage of overall revenues, the actual to GDP, estimated in the federal budget for 2011 by about 41%, although the limits of public spending to GDP rises are the other to about 54% to show the capacity of the government also and its role in economic activity for the country, the choice of the ratio of income to GDP is the relevant indicator and the strongest in modern financial literature to determine the capacity of the government and evaluate the results of stability of fiscal policy based on the principle of automatic without discretionary intervention and installed according to the selection of dynamic determined by the ratio of public revenue to national income. But in our country's economy which depends the general budget when the oil revenues by about 88% -90% (excluded government loans and various forms of public debt), the effects and cyclical fluctuations that are imposed on public finance Iraqi require the adoption of installed dynamic strength average price for a barrel of oil for purposes of determining income budget ratio to GDP, a price less than the price of a conservatory barrels of Iraqi oil sold in the global market based on the OPEC basket of about $ 10 on market prices prevailing in the world. In other words, being designed revenues (over expenditure) based on the inability of preventive or protective based on the difference between the prices achieved in the global market and oil prices, the default (conservative), approved in the planning of the public budget. Preventive and disability pay to hedge also to finance the deficit is likely sources of Aiardip represent diverse in the area of revenue collection, particularly borrowing from the domestic financial market and / or the international financial market.
Of the foregoing, the adoption of a barrel of oil source of $ 73 to assess the revenue budget for the year 2011 and an average export of 2.250 barrels of oil per day (offset by the trends that is sold Iraqi oil in the world market at the present time, amounting to nearly $ 83 a barrel).
If the prices of oils Mattabguet Iraq exported with the actual world market price and the attainment of the objectives of export amounts referred to in the above, the installer will generate a dynamic convergence of resources precautionary than 8 billion dollars, or perhaps more.
And that this extra precautionary resource which comes installed by the dynamic counterweight would be financially fiscal buffer no matter which is suspended in the bumper of the course on financial tool that is installed in the management of dynamic financial Katr of the public budget to recognize and avoid danger. The Stmathl resources bumper financial deficit estimated at 14 trillion dinars to end the budget to a balanced budget. And then avoid the country's burden of borrowing, as well as avoiding the problems of uncertainty resulting from the impact of changing the external price of the oil market on overall economic activity, which Twhran oil prices and quantities of production and exports had reached their goals, according to data the international market and the capacity of the country's productive and export capacity. At this point, fiscal policy is at the point of fitness to combine the capacity of representative government spending power to its goals of economic, social, and choose the installer Bsath dynamic and highly desirable to achieve a balanced budget.
There the question is, whether designed for the general budget deficit and a preventive and installed a dynamic and well known, but it ends with a surplus of Mali? What this means in effect surplus in the state of growth and economic development in our country?
Although the sources of the surplus in the general budget, which, however, result in the adoption of installed dynamic high hedge is by oil revenues, reserving to the GDP, but it represents a positive attitude in the design of fiscal policy and keeping a distance from the expansion is secured in revenue, which depends potential volatility because of the nature of the oil market and Majrib to maximize the risk budget (risk to meet the return), Alain the surplus is at the same time a counterweight financially fiscal buffer is used to assign and support the planning and the dynamics of public budgets for subsequent years and Ieparvi the same time resources in the stabilization fund is a quasi-sovereign wealth fund, where it is known that our country had ended in 2010 with a surplus precautionary reached nearly 12 trillion dinars. "2"
Which means he could be re-planning the budget for the development of the limits of optimal balance in 2011 between total spending and the accumulation of surplus towards the precautionary lead to macroeconomic stability and contribute to reducing unemployment and supporting economic development trends, as desired. And Mkhatrtrakm this surplus from outside the installer dynamic in our country, stresses often as a financial resource alone annual used to it public budgets without the availability of matches real assure Amehal that there is a weakness in the management and implementation of the general budget, in particular investment, including, as it did not exceed the rates of physical implementation of investment projects-governmental organizations 25 % and may increase the financial implementation of 45% except for the oil sector in the past two years.
As I have, alas, the data collected in recent months of the year 2010 facts represented by the accumulation of large financial resources of the central government and the public sector together amounted to approximately 31 trillion Iraqi dinars and distributed between the central government by 11 trillion dinars and the public sector by about 20 trillion Denargariba.
Accordingly, the proportion of cash flow from current income-qualified federal budget for 2011 and recyclable an asset cash amounting to about 43 trillion dinars and the proportion of 46% of the total public spending of 93 trillion dinars, the equivalent in any case more than three times the deficit precautionary in the budget year Almekdrbhawwali 2011 and 14 trillion dinars.
To hide the phenomenon that our country live overriding free ride to the maximum extent possible as it did not increase the contribution of individuals in the general revenues such as taxes, fees and other 100 thousand dinars per capita, while per capita amounting to nearly 3 million dinars from the budget expenditures of the college.
Conclusions
Our country is in dire need for the availability of an executive efficient, has the ability and flexibility in the implementation of the investment budget of $ 32% of the total public expenditures and close to 20% of the gross domestic product, which is acceptable according to standards prevailing global investment, and if we add the contribution of the private sector in total investment Let 10% of that output, the growth rates in GDP of the country would approximate 7% other words, the per capita GDP of $ 4443 now will double within ten years to reach in a timely manner nearly 10 thousand dollars per capita or less purchasing power current.
If it happens this percentage of the total investment of 30% of the gross domestic product instead of the bumper Aktnazha financial surplus which will be backed by
Oil investments and rates of desirable and targeted production amounted to three million barrels of oil per day in 2011 and reach export target of 2.25 million barrels a day, it could raise the rates of growth in gross domestic product to the target in the development plan for the years 2010-2014 of 9.4%.
Accordingly, our country is not need to borrow at this stage, but Bhajpaly hedge in the collection of loans can be accessed in the event that the installer dynamic may fail to the level of the Ewald balance the budget and deficit precautionary or preventive equal to the real deficit is the phenomenon of sub-optimal sub optimal, but indicate high efficiency in planning and implementing the general budget.
Noting that the installer dynamic to the extent that helps the potential to reduce the deficit Preventive gradually until canceled when achieving a balanced budget, but that in the case of surplus, that is installed in spite of his spontaneity, he could not provide sufficient capacity to reduce the volatility of positive saving of the surplus at this time in the interest of strengthening the power and the activity of the general budget and the transfer of the surplus off the priorities of the objectives of maximizing the capacity of the government in terms of spending power to achieve economic and social targets of the budget, which requires government intervention and any change in intended in the fiscal policy and other policies inherent in the investment and activation of development projects that are on the waiting list restricted disability precautionary expenditure ceiling specified (Kalmoaznat complementary investment and capacity to adopt and implement immediately).
Finally, probably wondering the center of financial and economic order in our country about the importance of the availability of 43 trillion dinars in cash in excess of the budgets of previous years and grouped in bumper financial fiscal buffer at a time when the country to the unemployment rates effective up to 18% of the labor force and rising to 28% of work force young people and our country in 2010 did not achieve the growth rates in gross domestic product, only 3.8%, according to optimistic estimates, or perhaps much less.
At a time not exceeding the per capita share of infrastructure, energy, material produced only less than 20% of the share before the outbreak of the Iran-Iraq war, and most scored, revenues in the budget of years past were caused by increases in rents generated by the oil markets did not come from any productive capacities concrete extractive industry, but the little bit, and that record oil production on the basis of 2005 amounted to $ 100 in July of the year 2010 approximately 118.5%, according to the statistical bulletin of the International Finance International Monetary Fund in September of last year.
To hide the phenomenon that the growing surpluses in the budget caused by the weak implementation of investment projects means that out of respect for saving investment that leads to frustration, which leads to a fall in the future savings due to the deterioration of the same income levels, a so-it irony prosperity paradox of thrift in the Keynesian literature.
Accordingly, the policy makers of Finance said they wanted an inquiry is always in our economy of one side of the ratio of fitness between the maximum capacity of the government of increased spending to GDP or revenue to GDP, and between the maximum capacity of the stabilizers dynamic selected, both of which they have to achieve stable level of gross domestic product, according to the goals Altnmoipalaguetsadip and social development of Iraq's federal budget. Promised that the target of the objectives of the country's development program for the next five years.
Footnotes:
"1" studies tend to adopt the current fiscal stabilizers dynamic as it is called automatic stabilizers are characterized by the adoption of measures about the financial authority to intervene through the diligence of the Movement of the budget to be replaced by other measures in the financial policy function more automatic or automatic. Thus, it is something of relationships that can reduce cyclical fluctuations in the economy without the direct intervention of the government, to intervene, which often leads to a slowdown between the need for the role of something in the fiscal policy and the actual commencement of the application of this policy, which consists usually of three Tbatwat the most prominent of the slowdown in the realization problem and the slowdown in the design and then slow down to take the necessary action is slowed down by the so-procedure inside lag. On this basis, represent the general budget, the specimen is installed for the application of the above mentioned any dynamic determine the percentage of overall revenues to the total output of the country. Declining GDP, for example, would lead to Amehal to cut income taxes of direct and indirect, etc., and when you rise in unemployment to be spending that increases and in turn lead to higher budget deficit. And vice versa reduced the deficit with increasing GDP.
"2" when the price of Iraqi oil source income to the federal budget for 2010 of about $ 62 a barrel, Iraq sold Nfoth in the international market at an average price reached $ 73 a barrel, and achieved a surplus of more than 12 trillion dinars in the budget at the end of the year, despite the fact that export daily oil has not reached its planned budget of $ 2.150 it reached about 1.9 million barrels per day source. However, rising prices have exceeded the impact of the rate of decline in export target, which offset lower volumes exported through higher prices of oil exports that exceeded the actual planned in the budget by about 17%, while exports declined by about 8%.
Sources
See:
Draft federal budget law of the Republic of Iraq for the year 2011
[You must be registered and logged in to see this link.]
