AMONG THE MOST PROMINENT SOLUTIONS ARE REDUCING EXPENSES AND SALARIES… AN ECONOMIC EXPERT PRESENTS SOLUTIONS TO THE FINANCIAL CRISIS IN IRAQ
On Friday, the head of the “Iraq Future” Foundation, economist Manar Al-Obaidi, ruled out the possibility of non-oil financial revenues replacing oil revenues in covering the expenses of the Iraqi state and the monthly salaries of employees and workers in the public sector in the country.
This came in a post by the economic expert on the social networking site “Facebook” in which he spoke about what is being circulated about the possibility of the country being exposed to a severe financial crisis, according to what media reports indicate recently.
Al-Ubaidi criticized what he called “the proliferation of rosy voices that sell people illusions closer to dreams than to reality,” which claim that money is available, revenues are sufficient for the salaries of all employees, and that the crisis will be resolved as soon as the salaries of special grades are reduced, saying that “this is an emotional speech that is not based on numbers, its goal is to tickle the feelings of the ordinary citizen and numb him, not to be honest with him.”
He added that “the state’s expenditures in the current situation cannot be covered unless the issue of salaries is addressed in a radical and genuine way, and not through patchwork solutions,” noting that “all non-oil revenues, no matter how much they increase, will not be a substitute for oil, and will not cover more than 10–15% of the state’s operational needs.”
Al-Ubaidi pointed out that “there is no resource today capable of compensating for oil,” adding that “everything that is being traded about sulfur, phosphate, silica and others, even if sold as raw materials, will not exceed $300 to $500 million in revenue annually.”
The economist also considered that “talking about strategic industries, from refineries to manufacturing industries, is correct in principle, but not timely,” noting that “these projects need at least five years to become productive, in addition to the availability of huge financing and liquidity that is not currently available.”
He pointed out that “the real problem is that Iraq is not only facing a crisis of revenues and expenditures, but also a deficit in creating a real economy outside of oil.
Al-Ubaidi concluded that “there is no solution without reducing expenditures, boldly addressing the issue of salaries, providing real, not merely slogan-based, support for the private sector, and restoring trade balance with countries away from oil rents.”
He continued, saying, “Anything else is just wishful thinking and a joke on the citizen who is meant to believe that the crisis can be solved with simple measures, while the truth is much harsher and more complicated.”
In March 2021, Mazhar Muhammad Salih, the Prime Minister’s advisor for financial affairs, confirmed in an interview with Shafaq News Agency that the reasons for the economy remaining rentier are due to the wars and the imposition of the economic embargo on Iraq during the past era, and what we are witnessing today in terms of political conflicts has led to the dispersal of economic resources.
The Iraqi state’s continued reliance on oil as the sole source of the general budget puts Iraq at risk from global crises that occur from time to time due to the impact on oil, which makes the country resort each time to covering the deficit by borrowing from abroad or internally, and thus indicates the inability to manage state funds effectively, and the inability to find alternative financing solutions.