24/10/2011Finance Minister: activate the private sector and increase oil production would be fatal to bridge the budget deficit
Baghdad-follow-up to the morning
Iraq is preparing to implement a series of actions to reduce risks and global economic fluctuations that can affect a country's overall budget, while the Finance Committee agreed on the importance of counting House of the general budget of the country rose 80 dollars a barrel instead of $ 85 for any breakdowns in global oil prices, the Finance Minister said the plan would contribute to reducing the public deficit, according to preliminary figures to 16.6 trillion dinars deficit 5 trillion dinars, stating that the plan Include increased oil production and the involvement of the private sector in all economic actors as well as the exploitation of the unrealized spending to bridge that deficit ...
The economists stressed during previous conversations made for (morning) on the importance of reducing dependence on oil imports in the financing of public budgets, noting that oil resource depleted, which invited them to activate the rest of the productive sectors in Iraq as the industrial and agricultural sectors.
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The moves come at a time when the International Monetary Fund criticized the objectives of the general budget, which tend to fill operational spending at the expense of investment spending, which faced many criticisms from specialists in Iraqi economic who emphasize the need for the general budget tend towards investment spending aimed at reconstruction and speed up the process of growth and poverty eradication.
He said Finance Minister Rafe Al-Issawi said Iraq seeks to reduce the budget deficit by two-thirds within three years through increased oil production and promoting private sector participation.He informed Al-Issawi in his Reuters in an interview on the sidelines of the World Economic Forum at the dead sea that he expected the deficit to five trillion dinars, down from the expected level of this year when 16.6 trillion dinars, $ 14.2 billion.
Al-Issawi said "there will also be spent however Verifier will eventually bridge the budget deficit and the deficit therefore is not a source of concern."The Minister did not specify the size of the projected deficit as a proportion of GDP but official figures identify budget 2011 when 82.6 billion dollars and expects a deficit of about 17 percent of revenue.
Al-Issawi said he hoped economic growth accelerated slightly to around five percent this year and nine percent in the next three years as Iraq begins to end the legacy of the adoption of economic activity on the State and contravenes the general slowdown in the economies of the region.
He said spending would rise by eight trillion dinars in 2012 as a result of the additional expenditure to raise wages and training security forces and the purchase of military aircraft and rising commodity import bill.
But he added that increased spending would be offset by the expected growth in revenue to approximately 95 trillion dinars next year with an increase in oil production, where privatization would reduce pressure on public finances for the Government.
Iraq currently produces approximately 2.7million barrels per day and seeks to strengthen the production capacity to 12 million barrels per day by 2017.
2011 budget is based on an average oil price of 85 dollars, before the House of representatives approves a price less than five dollars so recently, and export volume of 2.2million barrels per day of crude while 2012 budget expects export 2.6 million barrels per day with the same average price expected for this year.
The budget deficit is a challenge to the ability of Iraq to rebuild. The country's huge projects announced for the construction of hundreds of thousands of new homes and strengthen the country's electricity production is frequently interrupted by war and sanctions over the past 20 years, said Al-Issawi, "the main challenge today is destroyed infrastructure and the need for more capital expenditure and this means opening the door to the private sector."
He said the Government planned to accelerate privatization of State industries and is now offering free land for investors to encourage investment. "it is our understanding that part of the solution in the hands of the private sector."
The main challenge facing Iraq's economy still is to reduce dependence on oil to stimulate growth.
"The limited diversification with the adoption of oil economy, and this restricts growth and investment."
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