MP: The government failed to manage the financial situation

Shafaq News/ The Parliamentary Finance Committee said today, Tuesday, that the government and the relevant authorities "failed" to maximize budget imports and minimize the losses from the collapse of oil prices, stressing the state's need for internal and external borrowing until the end of the current year.

Committee member Hanin Al-Qaddo told Shafaq News agency, "The government's failure to control customs and border crossings obliged us to adopt the internal and external borrowing to secure the salaries of state employees after the impossibility of approving the 2020 budget in the remainder of this year".

He indicated that the government borrowed 15 trillion from Iraqi banks to secure the salaries of employees for three months and $ 5 billion from the World Bank to complete lagging projects of public benefit. However, the funds are still not guaranteed and we still need additional borrowing.

"The current financial situation requires granting the Minister of Finance the powers of a new internal loan to secure the financial need for salaries. Besides, the government and the relevant authorities should start preparing the 2021 budget law after the 2020 budget law became history due to critical financial circumstances", he added.

The deputy stressed the need to impose the government's control on all crossings and customs to salvage the deteriorating financial status and avoid losses and fiscal deficits that will harm the citizen's sustenance.

The setback in oil prices and their tumbling in global markets due to COVID-19 caused a financial deficit in Iraq and a difficulty in securing the salaries of state employees.

According to the Iraqi Federal Ministry of Finance, Iraq needs seven trillion dinars per month to pay the salaries of 6.5 million employees and secure government expenditures. This rose fears that the Iraqi government will soon have to reduce the release of foreign currency by the central bank, which leads to a decline in the exchange rate of the Iraqi dinar.

The Iraqi Council of Representatives approved earlier the internal and external borrowing law to address the financial crisis and secure the salaries of state employees, amid warnings of the dire economic consequences associated with borrowing.

The law also allows the government to "borrow from international financial institutions and foreign banks to finance public expenditures, provided that the amounts of foreign loans are allocated to investment projects and continuous regional development, taking into account that the priority of financing is to be given to the less funded governorates in previous years".

The law sets a higher ceiling for borrowing at 5 billion dollars from abroad, and 15 trillion dinars (about 13 billion dollars) from the inside.