Page 16 - DMEA Week 23

DMEA POLICY DMEA

government expenditures; limiting the financ- sectors believe the crisis can be overcome with-
ing of “high-priority” items; renegotiating with out reducing salaries.
oil companies operating in Iraq under licensing Instead, it has been suggested, the govern-
rounds to review contracts and ease the financial ment could purchase more dollars, borrow from
burden on the state; taxing some sectors; stop- banks, the International Monetary Fund (IMF)
ping new appointments; and freezing grants and or friendly foreign countries, and postpone debt
bonuses until further notice. payments.
Allowances granted to the president, prime But these are all non-radical solutions to a
minister, speaker, ministers, MPs, diplomats, chronic financial crisis. Officials think more
deans, judges and other governmental officials needs to be done in the long term. A recent
would be cut by 50-80%. World Bank report recommended improving
As for the rest of the state employees, the governance and promoting private sector par-
draft suggests reducing the allowances attached ticipation in selected productive sectors such as
to their salaries, as long as their final salary is no agriculture, electricity and gas. Efforts in these
less than 500,000 dinars ($400) a month. areas would be a helpful start.
Other remedies include reducing pensions
and stipends received by victims of the Baath Ihsan Ismaeel replaces interim oil minister
regime under Saddam Hussein, which would Ali Allawi
prevent people from receiving more than one Meanwhile, in a possible step forward Iraq’s Par-
salary. liament has given its vote of confidence to seven
The proposals are likely to lead to a back- cabinet ministers, including the key oil and for-
lash from state employees and beneficiaries. eign affairs posts, completing the 22-member
Observers have suggested that al-Kadhimi aims government of al-Kadhimi. The new ministers
to absorb the momentum of those opposing his include Ihsan Ismaeel, the former head of the
decisions and avoid sharp public reactions by Basrah Oil Company (BOC), to take over from
postponing the discussion and approval of the Ali Allawi, the finance minister, who had been
draft. serving as interim oil minister and has been ele-
“Everyone is convinced that the time has vated to Deputy Prime Minister for Economics
come to change our economic policy...or the and Energy, overseeing the oil ministry. BOC
Iraqi economy will collapse sooner or later. operates in Iraq’s south and is the country’s larg-
“Everyone knows that affecting the salaries est state-run oil company.
of employees… in light of the circumstances Ismaeel now has the challenging task of
that Iraq is currently going through, would be a boosting Iraq’s production and export capac-
serious threat to government stability,” Ahmed ity after years of underinvestment and infra-
al-Safar, a member of parliament’s finance com- structure damage resulting from war, as well as
mittee, was quoted as saying. “Those [employ- negotiating contracts with international oil com-
ees] already suffer from high prices and inflation. panies (IOCs), many of whom have been dissat-
Deducting their salaries will mean exposing isfied with the fiscal terms offered for upstream
them to additional pressure, and this will defi- partnerships.
nitely lead to an explosion. Cutting salaries The federal government in Baghdad is also at
would cause popular frenzy and widespread loggerheads with the semi-autonomous Kurdis-
demonstrations.” tan Regional Government (KRG) over oil reve-
Some specialists in the financial and business nue sharing. ™

Ihsan Ismaeel has
replaced Ali Allawi
as Iraq’s interim oil
minister.

P16 www. NEWSBASE .com Week 23 11•June•2020