Tues. AM TNT News Articles 7-13-21



Moody Foundation: Weakness of Iraq’s institutions and mismanagement will constrain the government in the face of shocks

The Moody American International Foundation for Economic Assessment stated that despite the high oil prices, there will remain challenges facing Iraq’s stability represented by the country’s absolute dependence on oil with weak institutions in addition to poor management, which will lead to weakness and restriction of the government’s ability to face external and internal shocks by relying on the economy It is basically weak .

 The International Foundation stated that its assessment took into account Iraq’s high rate of political risks and instability resulting from the internal political and social conflict, as well as regional geopolitical tensions, all of which will continue to impede the achievement of institutional and governmental reform, with slow economic growth and the absence of diversification of financial sources .

 On the other hand, Moody International Corporation said that implementing the government’s plans to nearly double the oil production capacity in the medium term will support economic growth and enhance Iraq’s financial and external position, but the extent to which this is achieved on the ground will be governed by future expectations of oil demand and price volatility as well as challenges Political instability and mismanagement that undermine investment in the oil and gas sector .

The International Foundation indicated in its report that the weakness of the administration was also manifested in the government’s inability to pass the budget throughout 2020, with the fact that Iraq is still classified according to the Transparency Index among the 20 most corrupt countries in the world. The spread of corruption is ultimately one of the biggest institutional challenges for Iraq, which directly affects the nature and effectiveness of the administration and the weakness of the trend towards reform and change.

In the view of Moody’s Institute for Economic Evaluation, Iraq’s divisive political scene and the risks of political instability in it will continue to impede any progress in the field of economic and institutional reforms. In addition, high oil prices and significantly reduced government spending needs since the end of 2020 have reduced incentives to move forward with reforms.

With regard to the aspirations and opportunities for stability in Iraq, most of the technical discussions that took place so far with the International Monetary Fund, which began in late 2020, refer to the opportunity to introduce a structural adjustment program supported by the Financial Support Facility provided by the International Monetary Fund. Such a program will serve as a reform approach, provide a degree of financial support and support Iraq’s credit eligibility .

 The report of the International Economic Corporation indicated that the continuing challenges of political and administrative instability in Iraq will continue to undermine investment opportunities and the participation of international oil companies in the expansion and development of the oil and gas sectors, which is necessary to achieve higher production rates in the current oil fields.

In its report, the American establishment states that with a degree of uncertainty about what the outcome of the upcoming elections could lead to, due to the electoral amendment approved by Parliament late last year, it does not expect that the composition of the next parliament will be radically different from the composition of the current parliament, which reduces the the chance of a change concrete material on the subject of reform .

The aspects of the impact of environmental, social and administrative considerations for Iraq scored high negative points for the assessment of the American Moody Foundation .

Where she mentioned that the country is exposed to very negative environmental risks resulting from carbon residues in the atmosphere left by burning fuel, due to the total economic and financial dependence on the hydrocarbon fuel sector. The mismanagement of the hydrocarbon sector file and the chronic absence of investment in the infrastructure of the oil and gas sector exacerbated this environmental pollution. Iraq is also among the countries most vulnerable to desertification and low rates of water flow due to the absence of good management of water resources and chronic neglect of infrastructure and water leads to a lack of dedicated to agriculture and the lack of water suitable for drinking water provides many demographic groupings .

The institution said that the negative social risks are represented in the labor market in the country resulting from the high unemployment rates, especially among young people, with expectations of high population growth rates that will further exacerbate this problem. The social risks are further exacerbated by the absence of basic public services such as health care and housing, the weak security situation and the instability of sectarian and ethnic tensions .

The institution stated that the record of the weak efficiency of Iraq’s fiscal policy, the weakness of its executive and legislative bodies, its judicial institutions, and its weak control over corruption are the main factors that undermine the country’s ability to address social and environmental problems and future shocks. link

Source: Dinar Recaps


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