Tuesday Morning Iraq Economy News Highlights 4-18-23
Tuesday Morning Iraq Economy News Highlights 4-18-23
The 2023 Budget Imposes Taxes In Various Sectors: The Citizen Is Unhappy About Paying, But He Demands Services And Development
April 17, 2023 Baghdad / Obelisk Al-Hadath: The 2023 budget came with a total of proposed expenditures amounting to 197.8 trillion dinars, and the price of a barrel of oil is about $ 70 per barrel, and a financial deficit of 63 trillion dinars (48.5 billion dollars), according to Prime Minister Muhammad al-Sudani, who indicated that this budget will be repeated In the next two years too.
The tripartite budget includes in its details the imposition of new taxes at a rate of 5% on the proceeds of sales of one liter of gasoline. And 10% on gas or kerosene oil. And 15% on imported fuel. And a 1% rate on sales of black oil.
In addition, an airport tax in all Iraqi airports, at a lump sum of 25,000 dinars per person for travelers outside Iraq.
This comes at a time when the country relies on revenues from selling crude to cover about 95% of its expenditures, achieving in 2022 financial revenues of more than $115 billion from the export of crude oil, to be the highest in years, according to official figures announced by the Ministry of Oil.
Iraq imports oil derivatives, such as gasoline, gas oil and white oil. According to the Oil Marketing Company “SOMO”, last year witnessed the import of more than 5 million tons of oil derivatives, at a value of $5.3 billion. Gasoline was the most imported, at a value of $3.8 billion, followed by gas oil, at a value of more than $1.2 billion.
Representative Amer Abdul-Jabbar says that there is confusion in the general budget, waste of non-oil revenues, and the introduction of new taxes.
The writer, Abdul Karim Al-Essa, believes that the citizen does not want taxes on gasoline and other taxes that add burdens and difficulties and burden him, such as taxes on real estate and increased fees.
The journalist, Raad Hashem, said that the budget is loaded with taxes imposed on goods and services, which raised fears of its impact on the economic reality, especially with regard to taxes on oil derivatives at a rate of more than 30%, and airports with a lump sum.
Nabil Al-Marsoumi, a professor of economics at Al-Maqel University in Basra, says that these taxes will lead to an increase in non-oil revenues and raise their contribution to 13%, but they will be offset by a rise in the cost of transporting people and goods and a new rise in the prices of goods and services, whether locally produced or imported, which may It leads to exceeding the annual inflation rate specified in the budget by 5% and negatively affecting the standard of living of citizens.
The writer, Sami Al-Sudani, called for the need to enact and legislate the tax system by benefiting from advanced European experiences, which is the best way for justice, saving and organizing funds.
Al-Marsoumi estimates that these taxes will save about $400 million for the government, but he warns at the same time of their negative effects, which may lead to damage to the standard of living of vulnerable segments of society.
A member of the Finance Committee, Jamal Cougar, says that the Iraqi state, like any other country in the world, imposes taxes when its resources are reduced to support its budget, and here the citizen is the victim, not the government.
In turn, international economics professor Nawar Al-Saadi points out that there are what he describes as “distortions” in the tax system in Iraq, and he attributed this to its lack of reliance on advanced financial systems.
Taxes are important sources of income for governments, and these revenues are used to finance many government services and develop infrastructure in countries, such as roads, bridges, schools, hospitals, water, sanitation, and public transportation, all of which contribute to improving life and providing comfort and well-being for citizens. However, the Iraqi citizen is tired of paying taxes, but at the same time he wants to provide services and jobs, and in the event that citizens refuse to pay, this will hinder the wheel of development. https://almasalah.com/archives/49119
Parliamentarian: All Parties Are Determined To Approve The Budget Quickly
Money and business Economy News – Baghdad Doha Al-Qaiser, a member of the State of Law bloc, confirmed, on Monday, that there is a parliamentary determination to approve the financial budget "quickly."
In an interview with "Euphrates News" agency, which was followed by "Al-Iqtisad News", Al-Qaisar said, "There is a parliamentary determination from all parties to pass the budget law quickly."
And she continued, "Parliament left the second reading session of the law, open since the dawn hours, and will resume its work at 1 pm today to complete the rest of the paragraphs of the second reading of the budget after it was completed by the Finance Committee." https://economy-news.net/content.php?id=33626
Parliament invites to host ministers and the central bank on the budget
Posted On2023-04-18 By Sotaliraq Parliament called on Muhammad Al-Habousi to host the ministers and the Central Bank regarding the budget.
A statement by the Parliament Speaker’s Office stated that “the Speaker of the House of Representatives called for hosting ministers, officials and the Central Bank in coordination with the supporting committees and taking into consideration the parliamentarians’ observations on the budget.” LINK
A Report Reveals The Reasons For Total's Retreat From The Final Terms Of The "Giant Deal" In Iraq
2023.04.18 - Baghdad - people Sources reported some time ago that a $27 billion deal between Total Energy and the federal government in Iraq had stalled. It seems that it is on the way to resumption, although not in the form that the major French oil and gas company initially imagined, according to a report by the London-based Al-Arab newspaper.
Total Energy, the Italian Eni, and British Petroleum, according to the report, which was followed by "NAS" (April 18, 2023), played a major role in Europe's attempts to secure new energy supplies to compensate for its imports of Russian energy, which it has turned away from as part of its sanctions imposed on Moscow since the invasion of Ukraine in February 2022.
Total Energy remains fully aware of the risks inherent in doing business in the oil and gas sector in Iraq while continuing its pursuit of the European common good.
This awareness of the risks may be the reason for the retraction of the final terms of the giant deal, which has caused its delay since the initial agreement was signed in September 2021.
The main danger facing Western energy companies operating in Iraq lies in the scenario of falling into the trap of rampant corruption that is spreading in the oil and gas sectors in the country, which harms its reputation and the country it represents, in addition to the financial and legislative consequences.
And Iraq has always been among the worst 10 countries out of 180 countries in terms of the size and scope of corruption in the publications of the “Corruption Perceptions Index” that the independent organization Transparency International annually publishes.
The organization states that the factors that have led the country down international corruption rankings, sparked political violence and hampered effective state building and service delivery, include massive embezzlement, procurement fraud, money laundering, oil smuggling, widespread bribery and bureaucracy.
Its report concluded that political interference in anti-corruption bodies, politicization of its issues, weak civil society, insecurity, lack of resources and incomplete legal provisions undermine the government's ability to curb growing corruption.
It is noteworthy that it is these risks associated with Iraq's oil and gas sectors (which still account for more than 99 percent of the country's exports, 85 percent of the government budget, and 42 percent of GDP) that prompted major Western energy companies to leave the country during Last few years.
The trend included Shell's departure from the giant Majnoon oil field in 2017 and the giant West Qurna 1 oil field in 2018, and the American Exxon Mobil company's announcement that it also wants to get out of West Qurna 1 and its withdrawal from the joint seawater supply project that is part of the aforementioned giant deal for Total Energy. The reason for Iraq moving forward with the deal lies in the fact that China does not have the technical capabilities to implement everything it says.
And very shortly after Total announced this new huge investment in September 2021, Iraq also announced efforts to revive the Iraqi National Oil Company. The head of the Development Consulting and Research Company in Oslo, Ahmed Musa Jiyad, said in a statement in 2018 that Article 12 of the law related to the establishment of the Iraqi National Oil Company included a legal cover for corruption by allocating at least 10 percent of oil export revenues to three funds (“Citizens Fund” and “Generation Fund” and “Reconstruction Fund”).
He added that the authority of the INOC board of directors could be expanded even further, as revenues from oil and gas exports would be considered financial revenues for the INOC according to the 2018 version of the law (and the 2021 version related to the INOC).
Unfortunately for Iraq, it soon became clear that one could not become a leading figure in France's leading oil and gas company by being altogether naïve in expecting the idea of reviving the Iraqi National Oil Company to be a good idea. Total Energy quickly refused to enter into a partnership with the Iraqi National Oil Corporation, due to the lack of clarity in the legal status of the company, which it did not trust. Then, in October 2022, Iraq's Federal Supreme Court annulled the decision to revive the Iraqi National Oil Company on the grounds that several of its founding clauses were in violation of the constitution.
It appears that the thrust between Total Energy and the Oil Ministry has since been aimed, at least on the French side, at preserving the legitimacy of every clause regulating bilateral dealings as would be expected of such a Western company.
The experiences of Western energy companies in Iraq have highlighted that there are two keys to exiting the risk/reward matrix in the Iraqi oil sector with a sound reputation. The first lies in determining the meaning of every word in every sentence in every contract with the best legal mechanisms available in the West, and this is what Total Energy did.
The second lies in reducing risks in projects belonging to any entity linked to the Government of Iraq, albeit indirectly. This may be the reason for Total Energy's decision to proceed with the huge deal when the Iraqi government dropped its demand to increase its stake in the project from the agreed 25 percent to 40.
The current agreement stipulates that the Iraqi government, through the Basra Oil Company, will own a 30 percent stake in the giant deal. Total Energy will own 45 percent of it, while Qatar Energy will own the remaining 25 percent. There is evidence of Qatar's development to become more suitable for Western energy requirements.
If the deal goes through as planned, it could be a game-changer for Iraq. Its projects include the completion of a joint seawater supply project that is crucial to enabling the country to reach its long-term crude oil production goals of 7 million barrels per day, then 9 million, then 12 million.
The project involves taking sea water from the Gulf, treating it and then transporting it through pipelines to oil production facilities to maintain pressure in reservoirs and improve the longevity of the fields and their production cycle.
The long-delayed plan for the Social Security Support Program is to provide about 6 million barrels of water initially to at least five fields in southern Basra and one in Maysan province, and then expand its use to other fields.
The second project is also urgent. It lies in the collection and refining of associated natural gas, which is currently burning in five oil fields in southern Iraq, namely West Qurna 2, Majnoon, Tuba, Luhais and Artawi. Initial Iraqi Oil Ministry comments last year highlighted that the plant involved in this process is expected to produce 300 million cubic feet of gas per day and then double that after a second phase of development. And Iraqi Oil Minister Ihsan Abdul-Jabbar said last year that the gas produced from the second Total Energy project in the south will help Iraq cut off its gas imports from Iran.
Successful capture of associated gas rather than burning it would also allow Iraq to revive the long-stalled $11 billion petrochemicals project with Nebras Power, which could be completed within five years and bring the country an estimated profit of up to $100 billion during the initial contract period. She is 35 years old.
Total Energy already has experience operating throughout Iraq, owning 22.5 percent of the Halfaya oil field in Missan province in the south and an 18 percent stake in the onshore Sarsang oil field in the Kurdistan region of Iraq. This gives it specific operational experience in Iraq that will enable it to increase crude oil production from the Artawi oil field, the third of the four projects it is committed to.
According to previous statements from the Iraqi Oil Ministry, Total Energy will help increase production from the Artawi oil field to 210,000 barrels per day of crude oil, which will be an increase from the current 85,000 barrels per day. The last of the four projects to be implemented by the French company will be the construction and operation of a solar power plant with a capacity of 1,000 megawatts in Iraq.
https://www.nasnews.com/view.php?cat=105838
An Economic Advisor To Nina: The Country's Interest In The Three-Year Budget Lies In Reducing Expenditures And Avoiding Borrowing.
Tuesday 18, April 2023 11:26 | Economical Number of readings: 295 Baghdad / NINA / - The consultant in industrial development and investment, Amer Al-Jawahiry, confirmed: The country's interest in the three-year budget lies in reducing expenditures and avoiding borrowing.
He told the National Iraqi News Agency / NINA /: The approval of the budget will be as soon as possible and its decision will be according to the directions of the political blocs.
Al-Jawahiry added: The supreme interest lies in keeping costs down and avoiding borrowing, because borrowing will cover operating expenses that are not really productive.
He explained: The most important thing in the budget is how do we invest the money to bring in revenues outside of oil?He stressed the importance of investing in major projects to achieve future revenues.
And the House of Representatives had adjourned its session after it finished yesterday evening the second reading of the state's general budget.