Page 15 - DMEA Week 23

DMEA POLICY DMEA

Iraq facing a financial crisis and

public service meltdown

IRAQ IN the past month Iraq’s new Prime Minister, families.
Mustafa al-Kadhimi, has taken several steps to The oil price collapse brought on by a dispute
bring some stability and order to his country, but between Saudi Arabia and Russia in March sent
a major challenge lies ahead as the country faces the value of Iraq’s exports plummeting, and dur-
an economic crisis which could leave millions of ing April and May they brought in no more than
Iraqis out of pocket and lead to a fresh outbreak $3.49bn, about a third of the sum needed.
of unrest. Although oil prices have begun to recover,
The recent sharp decline in oil prices, the with the price of a barrel reaching $42 over the
coronavirus (COVID-19) pandemic and months past few days, Iraq’s shortfall in revenues casts
of political turbulence have left Iraq’s financial a long shadow over June and July, as the coun-
situation in turmoil. try only receives the cash raised by exports two
On the horizon is Baghdad’s inability to months after their sale.
secure the next two months’ salaries for public
sector employees, or pay pensions and benefits, Crisis long foreseen
a loss of income that would affect the majority of Iraq’s over-reliance on oil has long been foreseen.
Iraqi households. A joint governmental-parliamentary com-
Such an outcome could stoke widespread mittee was formed months ago to address the
unrest, threaten the new government and see fiscal deficit and try to find additional resources
public institutions, including oilfields, targeted other than oil to boost the country’s annual
by angry protesters. financial budget resources.
The committee submitted a set of remedies
Loss of oil revenue and proposals to premier Adel Abdul-Mahdi
Iraq is the Organisation of the Petroleum shortly before he stepped down earlier this year,
Exporting Countries’ (OPEC) second-biggest but he ignored them.
oil producer; its economy relies heavily on the A revised version of this draft has now been
revenues of crude oil exports, which represent resubmitted to al-Kadhimi, in preparation for
more than 90% of the state’s income. voting and approval at the weekly cabinet meet-
The government needs 12 trillion dinars ing on Tuesday.
($10bn) to pay the June and July salaries of more The draft is said to lay out a set of urgent rem-
than 4mn employees, retirees and beneficiaries, edies to tackle this large budget deficit.
as well as cover the expenses of the efforts against The proposals sound drastic and include:
the coronavirus and food relief for low-income stopping the disbursement of “unnecessary”

Week 23 11•June•2020 www. NEWSBASE .com P15