Iraq’s Oil Sector Facing Economic Downfall

Via The Frontier Post, an article on Iraq’s oil sector:

Iraq’s oil sector is facing an economic emergency in the country. The slaries of the Iraq’s public sector employee salaries were delayed because of the economic setbacks.

The Ministry of Finance announced on Tuesday that it will start distributing the unpaid salaries for the month of September on October 7.

The Ministry of Finance said that but the financial pressure in the country will continue.

The experts say that Iraq’s deep financial crisis is an outcome of corruption, mismanagement, unreliable crude exports and the expenses spent on the war against Daesh.

Iraq is largely dependent on oil exports, 60 percent of its economy runs on oil exports.

About 6.5 million of Iraq’s 39 million-strong population work either in the public sector or are retired government employees.

The monthly salaries of state employees add up to $ 5.5 billion. While public employees are the key to finance the Iraqi economy, income from crude sales fund around 90 per cent of its government budget, which includes salaries.

During the pandemic huge protests took place in Iraq the protests and impacts of the coronavirus pandemic, Iraq’s economy is hit by low oil sales, with its revenue sinking  alongside crashing global oil prices.

According to the official’s facts and data, monthly nationwide exports elevated to 3.049 million barrels per day (bdp) in September with increased crude loadings from Turkey and the federal and Kurdistan regional government.

But oil sales are still at near six-year low, according to the Iraq Oil Report.

The ministry released a statement saying that that it “is obligated to fulfill its legal obligations despite the severe shortage of revenues facing the country, and looks forward to cooperating with the House of Representatives and the relevant authorities in order to develop quick solutions to address the current economic and financial crisis,”

But some say that low oil demand is not the only reason why the government is struggling to pay salaries to its workers.

The high salaries of senior Iraqi officials have circulated on social media, causing some to blame them for depleting the state’s budget. According to an objection request filed after the decision to suspend his retirement pay, former Iraqi President Ghazi Ajil Al Yawer receives a monthly pension of 61.6 million Iraqi dinars ($51,000).

Because of the economic crisis in the country, the finance Minister Ali Abdul-Amir Allawi told pro-government media that payment of salaries is dependent on the emergency borrowing act that needs to be approved by the parliament.

The Finance Minister said that “ease the current financial deficit in the country,” causing what Prime Minister al Kadhimi called during a TV interview, an economic crisis never seen before.

But many in parliament are opposing the draft law. The oppose say that they have concerns that the emergency financing act could lead to bankruptcy.

 The Finance Committee of the Iraqi parliament said in a statement that the government is trying to throw the ball in the court of the Committee of Financial Experts, and the salary payment is the responsibility of the government.

“The Minister of Finance supposed to submit a reform paper within 60 days of approving the Internal Borrowing law on 24/6, we’re surprised with a request for a new loan,” the committee said in a statement.

The Finance Ministry said “the task force led by the ministry has completed the draft for economic reform,” stating that it is in the process of finalising the 2021-2023 budget.

This entry was posted on Thursday, October 8th, 2020 at 12:48 pm and is filed under Iraq.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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