Iraq’s oil sector and the Iraqi economy lives the worst phase in the history of the country, where the successive collapses of oil prices led to make a big crack in the Iraqi economy and produced a severe financial crisis following the fall in oil prices to record levels, not to mention the Iraqi oil sector, which suffers lack of vision and professional in dealing with the developments imposed by the oil markets around the world.
Monthly report of the Iraqi Oil Ministry , on production rates and oil exports during the month of January 2016 , included a lot of figures which of course is not in favor of the Iraqi economy.
As we know, the Iraqi economy is dependent on oil revenues in the annual budget by up to 95%, which is the reason for the weakness of the Iraqi economy and always make it at the mercy of the price of a barrel of oil and the vagaries of world oil markets .
the Iraqi oil Ministry has announced that sales for the month of January price of $ 22.21 a barrel, while the price of a barrel of oil, less than half of what was adopted in the country’s budget.
while the price was in the month of the last December 29.288 dollars per barrel, and the government has been approved in the budget of 2016, the price of 45 dollars per barrel, with an average export of $ 3.6 million barrel per day.
if we look at the price of oil in the month of December which is (29.288) dollars a barrel and compare it to the price of sales in the month of January 2016, which amounted to $ 22.21 a barrel, We’ll see that the difference came in the month of January less than (7.078-) dollars per barrel from the previous month.
The export volume : Iraq has exported an average of 3.285 million barrels per day during the month of the last January , while the export in the previous month 3.216 million barrels a day.
The revenues are decreased from 2.92 billion to 2.26 billion. The decline in revenues due to the decline in oil prices, which reached an average of about $ 29 a barrel in the month of the last December , compared to $ 22.21 for the month of the last January , as well as a decline in production.
In the year 2015 the sale of Iraqi oil amounted to the price of $ 44.734 a barrel, while the price per barrel of $ 56 in the 2015 budget.
the oil export rate in 2015 stood at 3.003 million barrels per day, while the adoption of the 3.3 million barrels per day in the general budget of the same year, a difference of 300,000 barrels per day.
As for the oil in Kurdistan – Iraq that it is exported about 600,000 barrels per day, independently of the central government of the northern provinces, which deprives the central treasury of the extra revenues from the northern oil fields.
and exported via the Iraq-Turkey oil pipeline 600,000 barrels of oil per day, while the export of 160,000 barrels of oil a day Using the tankers by land and by the knowledge of the Iraqi government, while the biggest amount came across the line with Turkey from the province of Kirkuk, without the return of share of the province of its revenues.
Fiscal deficit
in an attempt to meet the fiscal deficit , the Iraqi government announced last month that it plans to withdraw $ 16 billion in foreign exchange reserves of the country, to finance the fiscal deficit, which represents more than 37% of the cash reserves.
The Iraqi government proceeded to borrow from the Rasheed Bank and the Rafidain Bank, commercial Bank, to cover the deficit in the budget of the year 2015, but these banks will not be able to lend to the Iraqi government .
The government has resorted to withdraw funds from social security, and retirees to be able to pay the salaries of the month of the last January , it may be the government’s only option is to resort to the cash reserve, which is what might result in the collapse of the Iraqi economy and reduce its credit rating.
The situation in the Kurdistan region is not better than Baghdad noting that the indebtedness up to $ 22 billion, and may be the province is unable to pay the salaries of employees which previously announced that the salaries will be spent according to the revenues of the region and the exported quantity of oil, which prompted the provincial government to reduce salaries by 15 % to 25% and reducing the proportion of 75% of the salaries of special grades.
Dangerous future threatens Iraqi economy, which is on the edge of the cliff to the degree of disability for the payment of staff salaries, not to mention the corruption that has become a feature of it , and confusion in the oil policies, not to mention the face of the organization Daash terrorist, and full paralysis , which dominates the controlled provinces by ISIS, on the other hand, voices were raised and popular protests demanding the payment of salaries and to protest against the new salary scale adopted by the Iraqi government recently.
The situation in Iraq is really terrifying but the most important question is how the Iraqi government will be able to cope with the current financial paralysis? Will it resort to external and domestic borrowing ? Or is the ordinary citizen will bear this situation by delaying and reduce salaries ? and is the Iraqi government would be able to face the public outrage? These questions and others may have an answer in the upcoming days.
Rawabet Center for Research and Strategic Studies