The state’s general budget in light of the Corona pandemic

Despite the passage of three months from 2020, Iraq is still without a budget because of the political problems in forming the next government.

The general budget is a guess for the state's revenues and expenses in numbers for the next fiscal year, as Iraq revenues depends mainly on exporting oil.

With the outbreak of the Corona virus emerging in China and many countries of the world, it is expected to have a negative impact on oil prices globally for the oil exporting countries including Iraq, , as the price of oil reached $ 24 per barrel in the last week, and experts expectations indicate a decrease in Oil prices to reach less than $ 17 dollars in the coming days.

The reason for these negative expectations is the rapid spread of the virus, and with China imposing a quarantine in the city of Wuhan, which includes eleven million people, that led to the halt of many global factories in the city, the decrease in fuel demand globally by airlines, transportation, etc., and low growth The global economy that has reduced global oil demand.

It was expected to adopt the revenues of the state Iraqi budget in 2020 at a price of 56 dollars per barrel, and therefore any decrease in oil prices will be reflected on the country’s imports and budget, where experts expect Iraq to be exposed to a financial deficit estimated at about 38 billion dollars due to the decline in oil prices and trade with China.

As the value of Iraq's exports to Beijing, only in 2018, reached more than 22 billion and 400 million US dollars, according to the World Top Exporter website. China is the second largest Iraqi oil market after India, despite these negative expectations. Sources indicate that Iraq is able to pay the salaries of public sector employees through statements by central bank officials.

However, with the elimination of the Corona virus epidemic and its end, it is expected that oil prices will rise globally and thus eliminate the current deficit, etc. The solutions in dealing with the state’s general budget will be through:

1 - Increasing non-oil revenues, now and in the future, away from temporary solutions.

2 - Resorting to external borrowing from international financial institutions such as the International Monetary Fund or the World Bank.

3 - Raising the degree of transparency and reducing administrative and public corruption through effective supervision.

4- Working to reduce costs and control expenses and spending.

5- Working on an effective tax system that is able to collect the value of tax and fees while providing community service.

6 - Finally, resorting to printing currency to cover operating expenses.