Iraq’s financial policy good but it is not effective in the long run, says Saleh (former Vice CBI Governor)

Posted by on Oct 28, 2013 | Leave a Comment

10/23/2013 12:00 AM

He said that the budget is part of the five-year plan and not vice versa

Saw Mokhtassan in the economic necessity of making fiscal policy and a clear long-term in order to achieve the goals set for the budgets of the country’s public and take measures hedging to reduce the impact of fluctuations in oil prices on the budget with a supplier sole stressing in the same time, the importance of diversifying their resources from other productive sectors is oil.

In this regard, said economic expert, Dr. appearance of Mohammed Saleh: that the fiscal policy of Iraq is a good policy in the short term and ineffective in the long term for failure to diversify budget resources.

said in a statement (morning) The success of fiscal policy is stability and diversification of revenue and clarify its goals in reducing the unemployment rate or increase the standard of living of the citizens, pointing out that the economic analysis of the budget due weak in terms of follow-up to achieve the goals set for the budget according to fiscal policy. He said the budget kept the same roof my spend is drawing deficit or reduce government expenditure, which is the most in the door of budget expenditures, stressing that the budget must be part of a five-year plan and not vice versa to prevent any erosion in the process of economic development.

Funds precautionary and said the establishment of funds submersible , funded by sources of funding are known, represents one of the options hedge to the volatility of oil prices and must sustain the existence of the money in this fund ceiling allotted where he assists in the implementation of investment projects in the event of any sharp fluctuations in oil prices affect the investment budget.

Bumper financial and stressed that Iraq carried out bumper financial draw a deficit of 20 percent or more in موازناته public. To ensure that reflect spending policies and tax average revenue in the long term see the counselor Iraqi Institute for Economic Reform, Dr. Ahmed al-Husseini he can for financial authorities to adopt specific rules to deal with fluctuations in international prices for natural resource, and this boot in estimating revenues derived from the export of natural resource that would allow financial authorities in the countries of oil revenues amount necessary revenues of those resources that can be spent safely through the general budget annually.

Sticky unilateral said in a statement (morning) that Iraq adopted installed dynamically unilateral to estimate the financial resources derived from the production and export of crude oil adoption of the default price for a barrel of oil produced and the source of 90 dollars per barrel, but even under the rules of the boot price, may still be revenue associated with the vendor natural jump or landing record levels following the occurrence of any significant changes and sudden prices those natural resources and could lead to increases or decreases big interview on the side of public spending, which is very correlation and sensitivity to changes in the revenue side, especially those relating to income derived from the export of natural resource even in spite of the presence of base paving prices.

Restrictions on the growth of spending and said Chancellor that in this case could find economic difficulty absorbing these increases and / or decreases in public spending, and to control the volatility of spending more can complete part of the boot base put additional restrictions on spending growth from year to year.

Average oil prices and pointed out that for Iraq a great opportunity to benefit from the experiences and models of some countries to get rid of the problem (trick fiscal policy), for example, Mongolia using moving average metal prices range (16) years (prices of twelve years and prices projected for the current year and the next three years) and the assumption of this technique or formula a heavy load price preceding provides stability in forecasting revenues while allowing the integration of gradual price expectations outlook.

between either Mexico relies base preliminary based on the average oil price over the ten previous years (weight weighted rate of 25 percent), and the prices of futures for oil in the short term (weight weighted rate 50 percent multiplied by the factor caution), and the prices of futures in the medium term (weight weighted rate of 25 percent), and respond to these specifications more to changes in the general trends of the prices expected, either factor caution is (relative marginal sales revenue from natural resource), it makes the base primaries more conservative and limit the level of spending and working insulating effects of the unexpected and caused by potential fluctuations violent prices.

avoid interruptions sudden and concluded by saying: From this point can fiscal policy Iraqi use one of two methods mentioned to avoid interruptions surprise in government spending or tax increases unexpected, if any After depletion of the natural resource (oil) and this is definitely the best of the adoption of price precautionary barrel of oil source and follow the so-called policy of non-prosecution of international prices of crude oil, and equal design fiscal policy in light of this situation with government budgets to the depletion of natural resources and declining revenues gradually.

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