Iraqi government offers tough financial measures to salvage economy​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

[yota691]

Iraqi government offers tough financial measures to salvage economy

 

Government approves ambitious plan to be implemented in three to five years

 

Wide-ranging economic reforms prepared by the Iraqi government offer “tough measures” to stop the “bleeding” of resources and tackle a deficit that is hitting dangerous levels, a copy seen by The National shows.

The plan, approved on Tuesday by the Iraqi Cabinet and sent to Parliament for endorsement, recommends “urgent and necessary remedies” for the medium term, to be implemented between three and five years.

It could eventually enable the drafting of a long-term economic strategy.

The plan aims for sustainable fiscal stability, macroeconomic reforms, infrastructure development, improved public services, and creation of an administrative and legal environment to boost growth.

 

 

It says one of the main sources of waste is salaries in Iraq's public sector, where about 122 per cent of this year's forecast oil income is expected to go.That is the worst percentage since the 88 per cent in 2016, the plan says.

It suggests to reconsider hiring policy, salaries and allowances in the public sector.

Since its discovery in 1927, oil has been the backbone of the Iraqi economy.

That has made the government the main source for jobs, spawning a bloated public sector at the expense of private business.

Since the 2003 US-led invasion that toppled Saddam Hussein, Iraqi political parties pressed for high compensation and social benefits for the victims of his policies.

They secured government jobs for their supporters, eroding much of the revenue.

As of 2020, the number of government employees is about 4 million, up from about 1 million in 2003, with about 2.5 million retired state workers, the government said.

That has brought the spending on salaries and pensions to about $5.62 billion a month, or about 25 per cent of gross domestic product.

This year's crash in oil prices has left the government with a monthly deficit of nearly $4bn.

 

Annual spending on salaries has soared by nearly 400 per cent between 2004 and 2020, making up 74 per cent of this year’s expenditure, the plan says.

It suggests a reduction in the wage bill from 25 per cent of GDP to 12.5 per cent in the next three years.

The 95-page plan also calls for reducing the government subsidies, mainly for electricity, and a fuel cost based on international market prices.

It proposes an increase in revenue from taxes and Customs, and to cut financial support to state-owned enterprises by 30 per cent for three consecutive years.

To enable the private sector to grow, the plan suggests a fund financed by the government, private banks and foreign grants.

It details other reforms including introducing automation and modernising Customs and tariffs collection.

Most of the proposed reforms are not new. Many were suggested by previous governments or international organisations, but they were shelved due to political wrangling and public resistance.

"It’s true that many of these proposals have been suggested before but the challenge is always in implementation," analyst and policy consultant Ali Al Mawlawi told The National.

"The government needs to be realistic in what it can achieve and remain focused on the task at hand.

"The next task for this government will be to generate enough political capital by securing buy-in from the parliamentary blocs so it can push through a set of prioritised reform measures in the limited time it has left."

The latest attempt was early this year when the government introduced reforms that included payment cuts for government employees and pensions.

But days later, it called off the plan because of public pressure.

The first objection to the plan came hours later from inside Parliament, suggesting how difficult it will be to pass it.

“There is no difference between this plan and previous ones,” said Abdul-Hadi Mohan, a member of the Parliament’s finance committee.

[Donziman]

Im wondering how many Ghost employees they had in 1927. This is a relatively new

ploy used buy officials to steal money from the ministries. After all the checks are

printed and deposited in bank accounts with nobody having to show up on payday

to show ID or sign anything. These bank accounts are in banks owned buy the politicians. Pretty nice and clean way to steal millions.   Ain't life grande...

[3n1]

15 minutes ago, Donziman said:

Im wondering how many Ghost employees they had in 1927.

 

my guess it would be hard to see or find any ( ghost employees ) 

just kidding of course donziman , i enjoy ur common sense post , we wait ..cheers