‘Corrupt’ Oil-Rich Iraq Unable to Provide Much-Needed Infrastructure

[ALBUNDY]

‘Corrupt’ Oil-Rich Iraq Unable to Provide Much-Needed Infrastructure

September 24, 2012 Filled under Iraq Daily News

Iraq is not capable to provide $36.5 billion for needed infrastructure services to its people, despite more than $100 billion in oil revenues for 2012, a study by the International Center for Development Studies showed.

“Corruption and bureaucracy are leaving Iraq with no infrastructure services,” the London-based center said.

Iraq’s recent Infrastructure bill was “an attempt by the Iraqi government to legislate a law that enables it to borrow huge amounts of money,” the center said, adding “[the borrowed money] will end up being misused through financial and administrative corruption by which $250 billion of surplus budgets money had been wasted since 2003.”

Despite Iraq’s 2012 budget reaching up to $100 billion based on an average oil price of $85 in comparison to $82.6 billion based $76 oil price in 2011, the country was not able to provide $36.5 billion to complete 2.5 million residential units, six thousand schools and to repair “primitive roads network in some cities.”

“The loans are estimated about $36.5 billion, which the Iraqi government said they need, lack auditing and transparency. The ten articles of the two-page draft law, that was submitted to the Iraqi Parliament, does not include any commitments on foreign companies in case they fail to meet the specifications or time lines for projects which can cause waste of time and money,” the report statef.

The draft infrastructure law has also been ambiguous, according to the study, as rates are not specified to be paid for term loans under the pretext that they fit the size of each project, the center said.

Projects in the oil-rich country are also not completed despite the availability of liquid money.

“Projects in some provinces are only 6 percent completed with the availability of about $45 billion surplus of unspent allocations,” the report stated.

In addition, Iraq has recently borrowed $3.7 billion from the International Monetary Fund but the money was not spent on infrastructure, and “defense allocations went higher by 24 percent” in comparison to 2011, it said.

Misconduct by the country’s central bank was also highlighted.

“Iraq’s Central Bank reserves of hard currency are $67 billion, while the same bank has spent $1.7 billion of the IMF loan under the pretext of protecting Iraqi Dinar from oil prices fluctuation.”

The study warned that the shortage in funds will also “cause deterioration in vital sectors such as health, agriculture, industry and tourism.”

Meanwhile, Iraq has earmarked $250-275 billion for spending on infrastructure projects and other investments over the next five years, the planning ministry said on Wednesday.

Iraq needs development in almost every sector, as rubble and incomplete buildings are still commonplace more than nine years after the 2003 U.S.-led invasion that toppled Saddam Hussein.

“Allocating these huge sums will have a positive effect on pushing the development pace forward,” Planning Minister Ali al-Shukri, who was attending a financial and investment conference in London, said.

The investment plan will run from 2013 to 2017, his office said in a statement about his visit, without giving further details about possible projects or investors.

Shukri called on foreign companies to invest in Iraq’s housing, tourism, agriculture, industry and higher education sectors.

THE LINK : http://iraqdailytimes.com/corrupt-oil-rich-iraq-unable-to-provide-much-needed-infrastructure/

[RVPleaseToday]

That doesn't sound good at all!

[uncirculd]

Until they resolve the political issues, they can't move forward. No one agrees on anything. Thanks to the most high PM.

[Dalite]

“Iraq’s Central Bank reserves of hard currency are $67 billion, while the same bank has spent $1.7 billion of the IMF loan under the pretext of protecting Iraqi Dinar from oil prices fluctuation.”

Very interesting concept.

Oil is paid for in dollars

Some (perhaps all) of these dollars are converted to dinar by the GOI, via the CBI.

Where would the 1.7b USD have gone in order to protect the Dinar exchange rate?

What would it have been spent on?

The dinar remains relatively stable, while the dollar fluctuates. The CBI does charge a 13 dinar per dollar premium for selling dollars in exchange for dinar.

That is charged to the buyer, not borrowed from the IMF.

Past info on this indicated it was banked separately from other funds.

Is this the 1.7 billion that is referenced?

Did Iraq borrow 3.7b USD, or was that from renewal of the stand by agreement?

Anyone hear anything about a separate loan from the IMF, above and beyond what was renewed in July?

Inquiring minds want to know.

[zigmeister]

Very interesting concept.

Oil is paid for in dollars

Some (perhaps all) of these dollars are converted to dinar by the GOI, via the CBI.

Where would the 1.7b USD have gone in order to protect the Dinar exchange rate?

What would it have been spent on?

The dinar remains relatively stable, while the dollar fluctuates. The CBI does charge a 13 dinar per dollar premium for selling dollars in exchange for dinar.

That is charged to the buyer, not borrowed from the IMF.

Past info on this indicated it was banked separately from other funds.

Is this the 1.7 billion that is referenced?

Did Iraq borrow 3.7b USD, or was that from renewal of the stand by agreement?

Anyone hear anything about a separate loan from the IMF, above and beyond what was renewed in July?

Inquiring minds want to know.

Good catch. And I haven't a clue.

[ALBUNDY]

RVPleaseToday, Uncirculd : yep. You've got that right.

Zigmeister : me, too.