What if the delay of passage of the federal budget in 2010?
Iraqi individual lose up to a million and a half million dinars annually
د. D. كمال البصري: Kamal al-Basri:
Projections indicate that the federal budget for 2010 may be delayed until after the elections and these expectations concern to economists and those interested in (economic morning) and as usual, to give important issues give this matter serious attention has conducted extensive dialogue with the economic expert, Dr. Kamal Al-Basri on the effects of delayed approving the budget through the following points:
Has tried to visual as it is known by the specialist and interested and knows of the economic figures and statistics to answer about the effects that would result from the delay in approving the budget with the view of the importance of approval and more importantly, he warns of some exaggeration in corruption as an obstacle to approving the budget and promoted in a manner subversive of corruption, stressing the importance of expediting approval.
* What is the importance of adopting the federal budget?
Kamal: the importance of approving the budget comes from the importance of providing liquidity for economic activities. ولتوضيح الصورة سوف استعين بالامثلة والحقائق التالية: To clarify the picture will be hired and the support extended by the following facts:
Not long ago formed a shortage of liquidity in the United States to the global financial crisis (through the repercussions on the economies of the countries associated with them). And found many of the business difficult to get the money that has been its credit in the banks, let alone borrowing it, or imagine a situation in which the wheel or plane can not refuel necessary to complete their journey, in this case there are two options: either delayed the flight to another date, or start the trip and the search for filling stations to refuel. Will result in both cases the cost of economic and social.
Or imagine a situation in the human body, which suffers the lack of liquidity in circulation.
At best will break down the movement of members, but mostly just lack of liquidity caused brain cells malfunction and result in the so-called paralysis, and in many cases stop the heart muscle.
There are examples of semi-strong and the economic situation: the delay in approving the budget, delaying the start to the business and multiple bottlenecks. In the past years we have seen, even with the budget to suffer and complain all state institutions, without exception, lack of cash (due to poor customizations, and difficulties in disbursement procedures) ..
Imagine a situation in which the contractor not getting payments is expected to be keeping its word on the payment of financial obligations to the bank that deals with him, and the other for the payment of the rights of workers and planning to buy Msltzmat work equipment and materials. Now imagine the consequences of this situation on the rest of the economic facilities ...
The adoption of this budget in the world an important annual event in the history of the States, that the budget resources are the fuel the wheel, and stop the fuel cuts the wheel to move do not reach its target.
The situation of the citizen which is the lower standard of living, poverty and deprivation, is looking to make a representative to take into account national interests and the sanctity of a "social contract" and that the rush to deal with the general right to the same force when dealing with the right sector. But (with regret) we see cases of a quorum (in the meetings of the Council of Representatives) when it comes to the right sector, and lack of a quorum when it comes to the right year.
We see leadership, "ordering people mainland and forget themselves.
Capturing that these practices Atsem in the reconstruction of Iraq and human well-being.
In fact, the only one of the injured will not be approved is the people.
In view of such practices can not imagine (for example) the continuation of the rush and the work of contractors Ooacharkat sober (local Ooalajnbep) who contribute to the construction and progress of the Iraqi economy.
They certainly do not find Iraq a competitive investment environment and are keen to work.
And what happens when these companies to refrain from working in Iraq for the existence of financial benefits, for example, their charge to the international banks?
There is no doubt we will find ourselves, we are working hard behind the companies that are not reliable in its promises and performance and this is the case today.
The attempt to politicize some of the political blocs to the subject of approving the budget and the introduction of their accounts within the electoral but leads directly to damage to the Iraqi people, reconciliation, suffering and not the government, as they thought.
Q: What about corruption associated with approving the budget, and he's talking about another?
In this area confirms that the optical Some claim that the adoption of the budget with the presence of corruption in the administrative apparatus of the state will increase the state of corruption, or use the pretext of the current government of the budget for electoral purposes, forget that Iraq has a strict regulatory body, has demonstrated the sincerity of that past events. I do not know Does the prevailing corruption embodied Bchkhos members of the current government, or is a general situation? Are not the current government coalition government that includes all the components involved in the political process!.
There is no doubt that there are teams who are exaggerated and promoting corruption in this way does not wish to sabotage the progress of the democratic process in Iraq.
He adds when we talk about corruption in this way, we are not underestimating it, but call for the understanding of its causes. It's bad condition associated with all governments in the countries with transitional situation, the more pronounced in the absence of the role of citizenship and the rule of law. It may be useful to point to him.
Case of lack of awareness of responsibility, because of competing interests and the likelihood of self-interest of the public interest.
As that of the causes for the difficulties and complexities of the government's actions and the long-standing, and under Atop inflation and severe and the cost of it, you rush outside the context of the system.
In many cases, corruption not explain the individual's sense of justice because of the absence of the rule of law, and then grow when an individual sense of defeat and loss (without the right). Which the individual finds himself in trouble and out of deviation from the norm or law.
That all the foregoing cases is found in all countries of the world, without exception (but different intensity from one country to another).
In a study we did in 2008 and 2009 to examine the corruption associated with the production of government services, and for the cause of the poor rates of performance.
Initiated a study involving the preparation of a questionnaire to the ministries include the implementation of construction and contracting of local processing and external questionnaire included operations on the Declaration and the assignment and the contract up to the implementation.
After receiving the answers were analyzed and the results are revealing a range of factors:
Which can be categorized into:
External factors, is to security conditions, and stringent control of institutions, and the absence of infrastructure.
Internal factors, including poor efficiency of performance within the state's departments, and the absence of studies, young and poor efficiency of contract administration, and the absence of the right person in the appropriate location.
He stressed that there is visual factors related to coordination between government departments, including the lack of cooperation of all state agencies, such as the decisions firing rate (Ministry of Planning), allocations and disbursement of Government (Ministry of Finance) and the opening credits (the Central Bank and Commercial Bank of Iraq).
The internal factors refer to non-employees to exercise their roles with the required efficiency and poor implementation can be interpreted impeachment, which requires finding the necessary incentives (moral and material), or deficient: which requires training, rehabilitation and putting the right person in the appropriate location.
The theme of the problem of sense of responsibility, it is often believed to employees of institutions (the contractor) that their role ends once the conclusion of the contract with the contractors.
While requiring the need for a genuine partnership between the contractor and the port.
* Do you think that a delay in approving the budget will not help solve the problem of corruption in the performance?
I call on those alleged in approving the budget, to invoke: the case of a mother who can not aid her son in access to treatment and saved from the harsh winter cold, or the state of the businessman who borrowed working capital (interest), has long been waiting for his compensation payment after completing his work.
There is no doubt the face of this severe cases the individual finds himself compelled to defend himself to behave legally unjustified.
Let us remember that the citizens of what it lost to the legalization of economic laws is equal to 3.3 dollars a day, or 1,404,000 dinars in the year.
* What is your opinion the most important challenges faced by the budget?
There is no doubt that the budget of the most important documents issued by the government as a document include: the government's strategy to maximize the welfare of the citizens and alleviate the sufferings, and to address the current economic challenges, and reflect the policy of economic reform, and to deal with external commitments (such as debt, compensation and economic agreements).
The importance of the budget it is responsible for the operation and management of the public sector, which produces 70% of the value of the gross domestic product. Has been planned 2010 budget in light of economic and social challenges can be summarized as follows:
The continued deterioration of the main productive sectors such as agriculture and industry, where the percentage contribution of agriculture to GDP from 8% to 3.5% during the period (1975 to 2008) and industry from 7% to 1.5% during the same period.
The unemployment rate is currently about 18%, and the poverty rate about 23%. The situation seems even worse, when we refer to the weakness of the private sector, and the absence of foreign investment (because of the difficulty of the investment environment).
The result was that Iraq was importing more than 85% of food and more than 90% of the capital material.
Not to mention the tensions in the rest of the economic facilities and in particular the production of public services.
The nature of the laws and traditions of the prevailing routines of work, and the phenomenon of the absence of the individual in the right place, an obstacle for the proper performance in both public and private sector, but a catalyst for the manifestations of corruption.
We find that clear in the weak rates of implementation in government investment projects at the provincial level and ministries.
Has resulted in severe shortage in the production of government services, such as electricity, water, transportation ...
Etc.. And that the file is run the standard economic political, and reflected in the nature of the decisions taken, and perhaps the most notable phenomenon of planning, operating expenses and continued bottlenecks in government services.
It is still a source of political conflict to delay the legislation necessary economic laws.
* What are the major features of the budget?
Will be described in this section to clarify revenue and public expenditure:
A. Public revenue: oil revenues have been planned on the basis of export (2.1) million barrels / day and the average export price (62.5) dollars per barrel (and the calculation of crude oil revenue source for the year / 2010 on the basis of (U.S. $ / 1170 dinars). Thus it was estimate total revenue as follows:
As is clear form the oil revenues of more than 90% of overall revenues. There is no doubt that the weak productive capacities and export of oil is a major obstacle to speed up the implementation of economic projects. The form of the absence of other financial resources, especially the revenues of customs duties is another problem (due to the reluctance of the legislature to enact laws customs tariffs.
B. Of public expenditure: public spending was estimated at the equivalent of 83 trillion dinars were allocated 60 trillion dinars for operating expenses and 23 trillion dinars of investment expenditures, and therefore the ratio of operating expenses and investment are:
72% and 28% respectively. As shown in the table below:
General Budget
Therefore, the projected deficit is equal to 21 trillion dinars.
The plans of the budget borrowing $ 3 billion from local banks, and $ 6 billion from the International Monetary Fund.
So how was planned capital expenditures?
Difficult diagnosis that the government platform or investment strategy agreed economic, past practice has revealed the need for an investment program and economic long-term and inadequate approach to the annual investment.
But browse through the budget you find that the government has given priority to key sectors: oil, electricity, municipal and health ... etc..
Formed investment projects for the electricity sector accounted for (18%) of the total allocations of investment projects (and monitor the allocation is equal to 4,083, while it is required is 7,150 trillion dinars), followed by the oil sector, primarily again, hitting 13% (in terms of monitoring the allocation is equal to 3,104 while What is required is 9.893 trillion dinars).
Assignments and other projects the amount of increase of) 56%) of the total allocations, it has been the basic services in the following areas: sanitation projects, water, housing and projects of the Kurdistan region and other) ...
As for regional development projects, has brought about the political reality of Iraq's new values and practices is decentralization in the administration of the provinces, but this practice is the task she's feeling weak and vulnerable because of weak implementation of investment budgets, and because of this practice accompanying rehabilitation and training, the difficulties in routine government actions.
Graph (1) depicts the execution rates the federal budget, where it is noted that the rates of implementation in 2007 of the ministries of the province of Kurdistan, and the provinces was 65%, 98% and 34%, and in 2008 became the same proportions 70%, 100%, 47% respectively. It rates low and encouraging, especially to the provinces. This is why the 2010 budget used for the second year to reduce allocations to the amount (2,654 billion) in all provinces including the province of Kurdistan, to be divided between provinces according to population density.
Graph (1) the execution rates of investment allocations in the ministries and provinces.
There is no doubt that the investment allocations made to balance it without ambition, as the investment allocations proposed by the ministries equal to 59 trillion dinars, while the total allocations equal to the agreed 23 trillion dinars.
Accordingly, the investment gap for 2010 is equal to 36 trillion dinars. It is a great obstacle to the lack of work programs of government institutions and prolong the suffering of the citizens.
Graph (2): the investment gap for a group of ministries in 2010 (billion dinars)
Q: How was planned operating expenses?
Were planned operational spending in the budget of 2010, which is reflected in table (4) as follows:
Compensation of employees: in 2009 increased by 46% and in 2010 plans also have an increase of 11%.
These include paragraph salaries and wages, allowances and rewards scheme.
Contribute to an increase in raising the standard of living of citizens.
It is expected to provide new jobs and the budget of 114.875, but will pay in the opposite direction of the policy of economic reform, which calls for controlling inflation, the public sector.
Goods and services: in 2009 increased by 48%, but in 2010 it planned a further increase is equal to 23%, and falls within this account all the expenses of goods and services and the maintenance of assets also includes allocations of goods and services used in the production of goods and services consumed by government departments.
Benefits: decreased by 9.3% in 2009, but it is expected to increase by 56% in 2010, which represents accrued interest on public debt and the benefits of remittances and bonds and foreign debt.
Subsidies: in 2009 the rate of increase equal to 82%, a substantial increase which intersect with the policy of economic reform, but in 2010 it is expected to drop 12
These individual allocations of support for public companies to produce electric power companies and the agricultural sector and the rest of the public sector companies. Has been allocated a little over 3 trillion dinars (equivalent to $ 2.5 billion) to support these public companies for the year / 2010, including public companies affiliated to the Kurdistan Region for the purpose of enable the resumption of its activities and work, but this support will not provide support for the restructuring of the real.
It is worth mentioning that these institutions employ about (633) a member.
Grants: has increased by 35% in 2009, and also increased by 23% in 2010, and include allocations of Arab foreign obligations and international grants to institutions and cultural services, media and humanitarian associations.
Social benefits: We have increased by 37% in 2009, is expected to be reduced by 9.9 -% and include allocations of the ration card (estimated total value of the program and by the year 2010 (3,500) billion dinars (equivalent to 2,991 million dollars annually), including Kurdistan region.
As for other expenses: increased by 22% in 2009 and 9.3% in 2010, including a reserve of emergency and compensation for the Kuwait war and the amounts of debt settlement and compensation different. Pushing Iraq (5%) of the total proceeds of exports of crude oil exported to Kuwait for war reparations.
Non-financial assets: The operating expenses if they represent the purchase of capital necessary for the normal functioning of the ministry or department and what these expenses does not represent legitimate "capitalist" or investment "spending has earmarked for the purchase of new vehicles for example," are included under this item, has increased by 60%, as was in 2009, amounting to 1,382 billion dinars.
Table (4) operational spending in the budget balance in 2010 compared to 2009
* What are the main observations about the budget?
Concluded Dr. Kamal visual observations on the budget, saying that the weakness of public finances and the magnitude of the financial burden required by government institutions, is facing a difficult budget choices.
The investment allocations that came in the budget for it was without doubt an ambitious (as above).
In return, we suggest the following:
First we need to adopt a comprehensive economic strategy and integrated for all economic sectors (medium and long-term) result from an alternative investment program for the policy of relying on annual allocations.
it is necessary to approve the financing of public projects to benefit from the option of "partnership between the public and private" (PPP) or the option of what is known as "the construction contract - Employment - return", which is commonly known as the BOT. It is a contract which gives the government concession to private sector to establish a specific facility and operation and then return it for an agreed, and the private sector when he might regain the cost and made a profit.
Has been developed for different contractual forms of this kind, and that these contracts can be applied in the rehabilitation of public facilities such as hospitals or the construction of new facilities.
These options may be a substitute for privatization in the foot on the projects they have planned for the privatization of state such as markets or industries, the central food or skin. That this option can provide the customizations necessary for the construction of key projects (dams, schools, parks, housing ... etc), and reduces the long-suffering citizens.
The long-suffering and difficult for citizens to understand government's delay to take advantage of this approach to investment.
It is time to benefit from the experiences of other countries in this regard such as India, Malaysia, and Saudi Arabia ..
Loans: Photos of the project financing are loans obtained from financial institutions (International Monetary Fund), or through the establishment of investment banks (or the regional development banks designed to work on regional development and financing of specific projects that can do it without reference to the general budget , and can regulate the banks on the basis of partnership between the Government of the regions or provinces and the private sector).
support farmers: We believe that the budget should be expanded extensively in this area (of the strategic importance of agriculture) to support prices of agricultural production and production inputs.
The current support is equal to (351) billion dinars for the year / 2010, including the province of Kurdistan) is equivalent to) 300) million compared to $ (317) billion dinars in / 2009 including support for oil derivatives.
As for subsidizing the interest on loans granted soft loans and grants to the unemployed, increased allocations in 2010 (120) billion dinars, after it was (84.42) billion dinars in 2009
That this support is very modest and not commensurate with the directions of public support of agriculture and the private sector and the fight against unemployment. What is true for farmers believe all the private sector.
Work to raise the operational capacity of the provinces by addressing the imbalance of weak implementation efficiencies, and streamline government procedures, and work to provide training and rehabilitation for workers.
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