Al Jazeera Net correspondents
Baghdad The Iraqi government faces major challenges, especially the rise in internal debt during the first nine months of 2024, reaching a new record level of 80 trillion dinars ($61 billion), in light of the expected financial deficit and the heavy reliance on oil revenues, the prices of which have been declining recently, and with Therefore, focusing on changing the methodology of non-oil revenues and searching for new financial sources is considered an important step to achieve financial stability in the future.
According to what economic expert Nabil Al-Marsoumi explained in an analysis he published on his Facebook page, this large increase in internal public debt reflects the presence of a large deficit in the current year’s budget, indicating that official data issued by the Central Bank of Iraq confirms the increase in internal debt at a rate exceeding one trillion dinars. Monthly, which indicates a continued widening of the gap between government revenues and expenditures.
On June 12, 2023, the Iraqi Parliament voted on the draft general budget law for the fiscal years (2023, 2024, 2025).
Zeroing out foreign debts
Member of the Finance Committee of the Iraqi Parliament, Moeen Al-Kadhimi, confirmed that the debts owed by the Iraqi government range from 70 trillion dinars ($53 billion) to 80 trillion dinars ($61 billion), indicating that this issue is considered controlled and normal in all countries of the world.
Al-Kadhimi explained during his conversation with Al-Jazeera Net that the current fiscal deficit is considered a hypothetical deficit, as the planned budget for 2024 amounts to 211 trillion dinars ($161 billion) in expenses, but the actual spending has not exceeded 100 trillion dinars ($76 billion) so far.
Al-Kadhimi pointed out that oil and non-oil government revenues do not reach 140 trillion dinars ($107 billion), which makes the disbursement depend on the cash liquidity available at the Ministry of Finance, stressing that this liquidity is sufficient to cover the salaries of employees and retirees, in addition to social care and other operational expenses. However, there is a noticeable deficit in the investment aspect, especially in the areas of urbanization and construction, which must be funded by governorates and ministries.
Al-Kadhimi explained that Iraq has almost zeroed out its external debts, which is considered an important step in light of internal debts that can be controlled by borrowing from the central bank or selling bonds to citizens.
The Ministry of Finance, in cooperation with the Central Bank of Iraq, announced in the middle of this month the offering of the third issue of government bonds (Enjaz) for public subscription with a total value of up to 1.3 trillion dinars ($1 billion).
Al-Kadhimi pointed out that the main and important thing is to change the methodology of non-oil revenues, as it is not possible to rely solely on oil revenues.
He pointed out that Iraq currently exports 3.5 million barrels of oil at a price of $70, but this price may drop to $50, which makes the government need to search for other sources of revenue, calling for seriousness from the government and cooperation from Parliament as political blocs in order to clarify to the people Al-Iraqi said that it is necessary to look to the private sector and search for financial sources other than the oil source.
Employee salaries and government programs
Economic expert Dhia Al-Mohsen, for his part, ruled out the impact of internal debt on employee salaries or general government programs in Iraq, indicating that Iraq is moving towards issuing multiple types of bonds to cover the financial deficit, which may lead to reducing the size of internal debt in the future.
Al-Mohsen said during an interview with Al Jazeera Net that public debt is considered one of the main factors that affect the level of economic stability in any country, and Iraq is no exception to that, adding that the Iraqi government resorts to financing the financial deficit either through external borrowing or internal borrowing. It is a type of borrowing from private or government banks, noting that the policy of the Central Bank of Iraq prevents it from lending to the government.
He added that the size of internal debt in Iraq is about 14.5% of the gross domestic product, saying, “But we do not believe that this size will have a significant impact on the Iraqi economy,” stressing that Iraq is moving towards issuing multiple types of bonds to cover the financial deficit, which may lead to Reducing the size of internal debt in the future.
He continued, “With regard to government projects, the size of the current investment budget remains small, reaching 34 trillion dinars ($26 billion), which is a number that represents nothing compared to the general budget, which rose to more than 122 trillion dinars ($93 billion). Therefore, the The increase in internal debt is not expected to significantly affect these projects.”
Al-Mohsen believed that the increase in internal debt would not affect employees’ salaries, as the government’s policy tends to focus on the social aspect more than the economic aspect, and this is the reason behind the increase in the internal deficit, stressing that the government is trying to provide more services to citizens at the expense of public projects and other important sections. In the budget.
