Sun. PM TNT News Articles 1-30-22

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TNT

Tishwash:
Rising oil prices..Does it boost investment and revive lagging projects?

A government advisor considered the rise in oil prices an “opportunity” to implement lagging projects and boost investment, while specialists in economic affairs called for benefiting from the revenues generated by increasing prices through economic projects and reducing dependence on a single source. Yesterday, oil prices crossed, for the first time since 2014, the $91 mark a barrel.

The financial advisor to the Prime Minister, Mazhar Muhammad Salih, said, in an interview with Al-Mada, that “the rise in oil prices is an opportunity to implement lagging projects and state investments,” noting that “there are more than 6,000 faltering projects.”

Saleh added, “The rise enhances investment and gives a vision for the future,” noting that “the government is in the process of creating a financing partnership with the private sector.”

The government advisor indicated that “the rise in oil prices requires opening the budget to employment-generating and income-generating projects, whether from the state’s investment budget or supporting private sector investment activities produced with soft loans from budget revenues,” proposing “launching agricultural licensing rounds, to be another resource to the the oil side. He pointed out that “the importance of hedging the risks of price fluctuations through a fund or account concerned with budget stability and is fed annually with a percentage of the oil rent surplus, to face the risk of low oil prices in unexpected future conditions on the activity of public finance and within the cycle of oil assets.” 

In turn, the adviser to the Iraqi Banks Association, Samir Al-Nusairi, said in an interview with (Al-Mada), that “the oil prices exceed the $90 barrier, which will strengthen the government’s financial position,” expecting “prices to reach above $100 per barrel.”

Al-Nusairi added, “The rise will, in turn, cancel the deficit in the 2022 budget, or it may be a very small deficit.” And he demanded a consultant to the Iraqi Banks Association, “the necessity of expediting the deployment of a sovereign fund (the Generation Fund) to protect the national economy in times of crisis or when prices drop.” 

A sovereign wealth fund or sovereign funds is a fund owned by the state consisting of assets such as land, shares, bonds or other investment devices. These funds can be described as entities that manage state surpluses for investment and promise billions of dollars invested by states in stocks and bonds.

 Al-Nusairi called for “activating the productive sectors, including agriculture and industry, and not relying entirely on oil.” For his part, the oil expert, Hamza Al-Jawahiri, suggested, “The continued rise in oil prices in global markets, as a result, and due to the return of economic growth for the major industrialized countries and developing countries, after declaring coexistence with the Corona epidemic.”

He continued, “OPEC believes that the continuation of the rise to above $100 will allow the production of high-cost oils, such as shale oil and oil under the oceans and seas, with production, which leads to a rapid drop in prices, and therefore the organization will maintain a balance in oil production that maintains a level lower than One hundred dollars.”

For her part, the economic expert Salam Sumaisem believes, in an interview with (Al-Mada), that “the rise in oil prices should be directed to areas where the Iraqi economy suffers from a lack of funding, the most important of which is bridging the deficit gap in the public budget, and that it is directed for development purposes and improving the situation of the citizen.” Especially the health file, especially with the outbreak of the pandemic and the phenomena of suffocation in hospitals, as well as providing expenses to meet the needs of the ration card and improve its quality. 

Sumaisem added, “The Ministry of Finance confirmed that the issue of raising the price of the dollar will continue for 5 years, and it is possible to address the effects of this, and thus reduce the internal debt represented by the state’s borrowing from some institutions such as the Rafidain Bank, the Trade Bank of Iraq and other banks, in addition to the volume of bonds submitted, and this remains based on the size of the state’s fiscal policy. 

She pointed out that “there is an important issue represented in the economic vision and benefiting from these funds and caution against their loss and loss of control and transparency, as there are no reports regarding the final accounts provided by the Financial Supervision Bureau, as well as waiting for Parliament to approve the 2022 budget.”   link

Source: Dinar Recaps

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