A “disturbing” economic vision about the relationship between oil prices and the budget deficit, 9 SEPT

 A “disturbing” economic vision about the relationship between oil prices and the budget deficit

Yesterday, on Friday, September 8, 2023, economist Nabil confirmed that the oil revenues achieved until August 2023 amounted to $61.513 billion, which is equivalent to 80 trillion dinars. He also indicated that the estimated oil revenues in the 2023 budget are $90 billion, which is equivalent to 117 trillion dinars.

According to a post by Al-Marsoumi, which I followed for information, the oil revenues earned until August 2023 amount to $61.513 billion, which is equivalent to 80 trillion dinars. He also stated that the estimated oil revenues in the 2023 budget are expected to reach $90 billion, which is equivalent to 117 trillion dinars.

He said that if Iraq continues to sell its oil at $85 a barrel, they could earn $8.7 billion per month in oil revenues for the remaining third of the year.

During a discussion, he highlighted that the revenue generated from oil could potentially reach 34.8 billion dollars between the months of September and December 2023. This would result in a total oil revenue of about 96.213 billion dollars or 125 trillion dinars for the year of 2023. Additionally, this would lead to a surplus of 6.213 billion dollars, or 8 trillion dinars, which can be used to reduce the deficit in the 2023 budget. However, this is only possible if all non-oil revenues estimated in the 2023 budget, which is about 17 trillion dinars, are realized. This may be unlikely though.

According to the economist, the net non-oil revenues earned in the first half of 2023 were only 421 billion dinars. This means that continuing with the budget deficit for the year 2023 will not significantly reduce the high price of oil.

The current draft budget shows a deficit of 63.275 trillion dinars. This is based on the assumption of a $70 per barrel price for oil, as more than 95 percent of budget revenues are generated from oil sales. These figures were shared by the Council of Ministers.