An article entitled / Between Corona’s Hammer and the Anvil of Oil, Iraq’s Economy, Where to?

An article entitled / Between Corona’s Hammer and the Anvil of Oil, Iraq’s Economy, Where to?

     Iraq is one of the countries that depend in its economic policy and with a large percentage on the rentier economy, which is extracting oil and selling it in the global markets, and this adoption constitutes 92% of the Iraqi budget, which makes our economy vulnerable to major crises and tremors as a result of any emergency or global event that happens, many economists expected that The year 2020 will go well and there will be economic growth, according to the World Economic Outlook issued by the International Monetary Fund in January 2020, when the global economy was recovering and he expected the global economic growth rate to rise from 2.9% in In 2019 to the equivalent of 3.3% in 2020 to reach 3,4 in 2021 that these estimates were not a mere coincidence or speculation but rather were based on clear indications after the improvement of the global trade situation when there were signs on the horizon of some progress in defusing a crisis Trade war between the giants of the global economy China and the United States of America

However, with the spread of the global Corona virus, these expectations went away with the inclusion of the wind and were replaced by a pessimistic wave that threatens the occurrence of a major global recession, which may be greater than what happened in the previous century between 1929-1933. According to the United Nations Trade and Development Organization (UNICTAD), the economy is expected to lose. The world is close to a trillion US dollars at the very least, as a result of the spread of Corona virus, and that global growth will decline to 2,3, and that a large wave of countries will enter a real depression.

Of course it is not the first; The first time that the epidemic occurred, and it was accompanied by human and economic losses. In 2003, SARS virus also spread in China and also losses, but according to economists ’expectation that this time the losses will be greater due to the growing Chinese role in the global economy and its severe impact, as China was previously ranked sixth in the world But now it is in second place globally, which means that China is a great power and controlling the economy in the world and may take leadership from the United States in the next few years as it contributed about 39% of global economic growth in 2019. In previous times, the economic impact was limited compared to economic effects The expected negativity due to the spread of Corona virus is because the affected countries were weak at the time in the global economy, as the new virus has hit hard many developed economies, including the seven countries and China, so the countries affected by the epidemic contribute about 60% of the global output, 65% of industrial output and 41% of the total Manufactured exports and this foreshadows a major economic catastrophe for the countries of the whole world, including Iraq, the country totally dependent on the oil trade I only

The collapse of crude oil and the Corona crisis coincide with a terrible political and economic vacuum crisis that the country has experienced since the resignation of the previous government and has become a caretaker government that cannot pass the budget and cannot take strategic decisions to save the country from its ordeal, even at a small percentage because Iraq now suffers from a crisis of lack of cash and financial liquidity due to corruption Public money is wasted by the previous governments and the current government, and it will appear to the public in the coming days or months if the Corona pandemic and low oil prices continue together, so it is necessary to have sufficient financial allocations to provide a strategic financial balance that will be at least for the next three months to confront this problem.

The neglect of Iraq for important sectors such as agriculture, industry and tourism has put Iraq in a dark tunnel and made its economy vulnerable to any crisis that occurs even if the Somali pirates crisis in the Indian Ocean, and if these two bidders continue for a longer period, the country will suffer an economic crisis that may lead in the country to its inability to pay the salaries of its employees and perhaps Lead to more protests than what happened at the end of last year, so the government must take immediate measures, including:

First: The failure of any policy or procedures without clear information and openness to the risks with the masses of the people and the local and international parties concerned, in a manner that enhances cooperation and participation in confrontation and implementing solutions, the government is not a single player in facing a challenge with this seriousness and inclusiveness, which requires benefiting from social and popular initiatives and activating solidarity systems Social solidarity and making room for decentralization in some areas to reduce costs and burdens of organization and administration in this complex situation is heavy burdens.

Second / Reducing Activity: It is the logical alternative to the high-cost comprehensive ban policy, which preserves the continuation of life and the non-collapse of the economy, especially in the case of the fragile economy of Iraq, where it maintains the balance between the continuation of life and the influx of basic commodities at the lowest level, and reducing the frequency of injuries to the lowest possible levels

Third / Cost Engineering: By formulating and distributing the costs of reducing direct and indirect activity in a manner that reduces its overall level to the lowest degree of burden possible, by distributing it fairly socially among the different social classes and classes according to its material capacity and in a time balanced manner between the current stage and the post-crisis phase and in a financially controlled manner between Financial instruments are more efficient and less expensive.

murtada Taha

public finance teacher