January 14, 2023
Baghdad / Obelisk: The appearance of Muhammad Salih, the financial advisor to the Prime Minister, suggested, on Saturday, January 14, 2023, that the spending ceiling for the current year 2023 budget will reach the barrier of 200 trillion dinars, specifying three directions that will be supported in the event of a financial surplus, including strengthening funds development included in the government curriculum.
Saleh told Al-Masalla, “Although there are statements about an extremist trend in increasing public expenditures, even in light of the conservative price of a barrel of oil that does not exceed 65 dollars (and it may reach 70 dollars per barrel) and an oil export capacity of about 4.3 million barrels per day. The general budget 2023 is the one who will decide in the end, is there a default deficit or not? Or how big is that supposed deficit?
Saleh stressed, “The need to legally include the financial surpluses collected at the end of the fiscal year 2022 and count them as an opening balance for the current year 2023 budget.”
The financial advisor pointed out that “extreme estimates of public spending say that the budget will have a spending ceiling of about 200 trillion dinars, and that the increases or surpluses will go in three directions, the first to enhance the capital of development funds included in the government curriculum, and the second to cover part of the operational budget and new appointments, The third will be allocated to the state’s strategic and service projects, including allocations not implemented in the Emergency Law for Food Security and Development No. 2 of 2022.
And Saleh stressed that, in “various cases, I expect the spending ceiling in the next budget to exceed the barrier of 150 trillion dinars, up to 200, if the (hypothetical deficit) is in a way that does not exceed 15% of the total spending, due to the presence of financial savings from last year 2022.” .
In an aspect related to the global financial situation, the Director-General of the International Monetary Fund, Kristalina Georgieva, expressed her concern about the state of the economy, explaining that the year 2023 may witness social tension at the global level, while the impact of tightening financial policies on employment has not yet appeared.
“We are only on January 12th and we already have (models) in Brazil, Peru, Bolivia, Colombia and the UK, all for different reasons but with very clear social tensions,” Georgieva said.
And if higher interest rates will eventually affect labor markets which is a logical consequence of the slowdown target, that could lead to additional tensions, she said.
And she added that the situation will not improve soon because of “inflation, which is still solid” and in confronting it, “the work of central banks has not ended yet,” stressing that “the crisis is most likely not over yet.”
Georgieva said that the economic slowdown is supposed to be greater in 2023 than what the fund expected in its last publications last October, but that the national labor markets “proved resistance,” considering that a “positive point.”
She added that this was mainly due to “governments moving quickly to provide financial support to the population in the face of high food and energy prices. But the available space is shrinking.
And Georgieva believed that “as long as people have jobs, even if prices are high, they consume, which helped the economy in the third quarter, especially in the states and in Europe, but we realize that the effect of tightening fiscal policies has not yet occurred.”
At the same time, the impact of raising interest rates on debtor countries will be severe, as indicated by Georgieva, whose foundation has been warning for months of the danger of turning about 60 percent of emerging and developing countries into countries suffering from sovereign debt crises.
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