The corruption and economic confusion practiced by successive governments in Iraq since 2003 in all its forms and fields is more greedy , deadly and spread to the country ‘s economy than the direct actual occupation.
The seriousness of this corruption appears in Iraq ‘s request to borrow from the International Monetary Fund; to address the deficit in the balance of payments on the one hand and dumping the Iraqi economy with debts and an endless economic dependency on the other hand; forcing Iraq to open the doors of its economy on a wide open for interventions, and control by major companies which are a subsidiary of the international Monetary Fund that the future generations will bear the burden of debt.
In the same context , the Iraqi government signed the so – called the agreement of the preparatory -measures with the Fund ; because of acute shortages and the deficit of the balance of payments of Iraq in light of the financial crisis, and corruption which is stifling to the economy and waste of public money of the state, and these measures represent a program overseen by the Fund with the help of the World Bank; to help their member countries, which are facing such crises.
the international Monetary Fund was originated by the end of the second World war in which the lives of tens of millions were gone , as it met in 1944 , representatives of 44 countries at a conference in Bretton Woods , USA, where they put the plans in order to stabilize the global financial system and encourage the development of trade, and remove obstacles in the long term on lending and international trade, and the reconstruction of Europe.
and they came out of the conference with the Bretton Woods Convention , whose its primary mission is the oversight on the international monetary system and strengthen it and to provide advice to its members on economic policies, and provide loans to the Member States, and control of its recycle.
The fund gets its funds from the member countries, and depending on the size of the quota , the number of votes allocated to each country member in the fund is determined , and the limits of borrowing provided to it by the fund , and the greater of the size of the country ‘s economy in terms of output, the increase of its stake in the fund , noting that the United States of America, which is the largest economy in the world, and contribute in the lion’s share in the international Monetary Fund and its share amounted by the 17.6% of the total of quotas,
the World Bank action which works on the development of developing countries, the fight against poverty and the development of financial systems of the Member States can not separated from the work of the international Monetary Fund, they are working in parallel and cooperation, and are linked organically, and to any State that becomes a member of the World Bank requires from it to be a member in the IMF first.
and that ‘s where the international Monetary Fund works as an umbrella of safety and the protection of international financiers , as they can lend their money without caution or concern whenever they want when they have the liquidity , the fund ensures the repayment to them that no matter what the conditions , and the results are, note that this is contrary to the principle of a free market, which states: ” the lender and the borrower bear part of the responsibility because of making lending decision”; which means that the financiers are making gains and profits under all circumstances, while the borrower pays high prices in the cases of right and wrong, (vow of globalization / Abdul Hai Yahya Zaloom).
In May 2016 , the IMF agreed to give Iraq a loan of $ 5.4 billion over three years, and the value of the first batch of the loan was of $ 600 million, and the unfortunate fact that the application of lending program is carried out on the oil country , so how about if this state is the richest one among the world ‘s nations like Iraq; and this is to raise doubts about the issue of borrowing.
The financial and administrative corruption and financial crises in Iraq exhausted its economy because of lower oil prices , Iraq has lost 85% of the strength of its economy; for its dependence mainly on oil, causing paralysis of the economic movement in it, “because the rentier mentality in which the government works , depends on the sale of crude oil, and the principle of maximizing of financial returns far from achieving of growth rates for the sustainable development , and this is a clear deficiency to the political system and a lack of experience on how the way of the management of economic life and its reforms and management of crises, and do not keep up with developments in the economic and political environment and technological revolution locally and abroad; thus created these crises , so it was necessary for those who are concerned to the management of the macroeconomic to carry out a series of actions and the most important of it is the evaluation of the reserves of the state of the foreign currencies and public debt , after the general financial evaluation and knowing the extent of the availability of financial resources for investment, as there must be an order of priority that would achieve economic reforms, and all of these reasons and the absence of economic decision to address the crises reflected negatively on the economic situation of the government and brought it to borrow money from the international Monetary Fund.
The economic Adviser to the Prime Minister , Mudhaher Mohammed Saleh revealed that the loan was worth $ 5.4 billion.
and that the interest rate on this loan does not exceed 1.5% per the year.
It is assumed that this loan helps to strengthen the creditworthiness of Iraq, while the parliamentary finance committee criticized the borrowing of Iraq from the IMF and leaving the corruption eats in the circles of the state. (thi qarna news)
IMF has developed a number of IMF conditions on lending to Iraq , including oversight of the auditing of Iraqi financial institutions, and the reduction of social benefits, and not compromising the salaries of small staff, with the exception of the staff of the second and first – class who are of the rank of director general or above, and to impose a tax account on them .
the Fund pay the loan granted to Iraq to 17 payment( pay the loan in installments ) on condition to watch after each payment the mechanism of closing the economic gaps by Iraq , noting that is an obvious evidence that the IMF is doubting about the credibility of the policies pursued by successive Iraqi governments over the past years after 2003.
As a result of this corruption , the incomes are declined ; what contributed to the high number of poor people in Iraq for more than 10 million people while the country is witnessing a big wave of displacement exceeded 4 million Iraqis who are suffering a lack of services or any chance of decent living , and the widening of financial gap between expenditures and revenues to $ 50 billion , according to Iraqi government sources.
And the balance of payments recorded a deficit that part of it is financed by using foreign reserve , which shrank by 13% at the end of September 2015 , according to the international Monetary Fund and the acknowledgment of the Iraqi government of it .
The IMF experts noted the following observations on the economic policies in Iraq:
1-lack of discipline in the public finances of the Iraqi state , expressing disappointment that the allocation process of the oil resources made on the basis of political considerations, rather than economic and scientific ones
. 2. The large banks in the name and size suffer according to the IMF experts from severe shortage in the capital, noting that the Rasheed bank has half of the minimum of the capital requirements of 250 billion Iraqi dinars, which means 214 million dollars. While The Rafidain Bank has the fifth of a minimum , while Islamic banks which its number of 6 banks working without its own Islamic banking law. Although the number of banks in Iraq of 56 banks , there is no exchange of information among themselves about what is related to the existing or potential borrowers.
It is strange that the Iraqi banks do not apply the most basic procedures of banking process, as after thirteen years of change that took place in Iraq, they do not have an international bank account number , (IBAN), which is an essential and important in the global banking deal, because the corrupt do not want to link the Iraqi banking system with the global banking system to facilitate money laundering operations and the financing of suspicious transactions; this matter is negatively affected on the development of the banking sector , the decline of the flow of foreign investments.
- Thepresence of alarge negligence in macroeconomic statistics, which suffer from the negligence and poor experience; therefore, most of the accounts that are prepared lacked quality, as a result of the shortage of the comprehensive source of data on the activities , and the categories of spending in the gross domestic product, and according to the Fund ‘s expectations ,Iraq ‘s oil revenues will amount to 5 trillion dinars in the current year, and 12 trillion dinars in 2017, while public debt , it will rise to 66% of gross domestic product this year , and the retarded reality of the Iraqi economy and lack of confidence of international institutions to the government administrations that came to Iraq after 2003, not to mention of the future picture which is not encouraging of the Iraqi economy , for these reasons that the IMF imposed several conditions on granting Iraq any loans, and agreed with the Iraqi government on a number of measures, namely:
1-Application of the “one treasury account”, to prepare a list of accounts of all banks that are under the control of the Ministry of Finance, and identifying all sub -expenditures in the federal government.
- Disclose thesize ofdues to local contractors, and provide detailed accounts of social welfare, and the ration card.
- Stop any new appointments, with theexception ofhealth, education and security sectors.
- Tighten controls on money laundering, demanding the integrity Commission to investigate the financial assets of senior officials; to improve anti -corruption efforts, and its promotion.
- The World Bank assistance to theMinistry of planning to carry out the reform of the “General investment management”; therefore the Fund experts advised to establish a central unit for the management of public investment to examine the projects based on the feasibility studies of the establishment of the so- called “integrated projects bank” under the management of the Ministry of planning, in order to increase investment spending, and achievement of growth outside the oil sector.
- The supervision on Iraq ‘s debt and subject it to the control in addition to audit the employees ‘ salaries to prevent the manipulation of it , twice payment or payment for those who are non-existed persons.
- At a time when Iraq is suffering from a severe shortage of services, especially electricity and water , the price of electricity will be increased for those who consume more than 600 kilowatts per month, and the Ministry of Finance has proposed taxing the salaries of employees of the second – class upwards, (Middle East online).
So it was better for the Iraqi government , rather than to resort to a borrowing process that will inevitably have negative effects on Iraq ‘s economic future and the dependency to the Fund, to heal its wounds by itself by relying on its own resources, to stop the bleeding of corruption and procrastination in the law enforcement on the one hand, and reduce its expenditures on the other hand, because this is a serious attempt to address the main causes of the problem, instead of seeking treatment of the results, noting that the states and governments when they have real will to resolve crises and problems , they are heading directly toward the real reasons for it, without taking any turns, sometimes ignoring it, and at other times trying to address the results without taking in to consideration the reasons, and the application of the argument ” Diagnosis of the disease is the half of the medicine”, the government should be more transparent in the diagnosis of the situation, and more procedural in walking on the right track in the treatments, putting the sovereign and national interest of Iraq before its eyes.
Shatha Khalil
Translated by : Mudhaffar Alkusairi
Rawabet Center for Research and Strategic Studies