Salaries at risk: Iraqi expert warns of economic impact if oil hits $70
Shafaq News/ On Saturday, Iraqieconomist Nabil Al-Marsoumi confirmed that a drop in the price of Iraqi crudeoil to $70 per barrel would have severe negative effects on the nationaleconomy.
Al-Marsoumi stated, “With oil pricesfalling and oil exports declining to 3.3 million barrels per day, monthly oilrevenues would drop to 9 trillion dinars, of which one trillion would cover thecosts of oil licensing companies, leaving just 8 trillion dinars to financevarious salaries totaling 7.5 trillion dinars monthly.”
“Half a trillion dinars would beallocated to fund the ration cards, with remaining operational and investmentexpenses being covered by scarce non-oil revenues, in addition to domestic andexternal borrowing,” he added.
Furthermore, Al-Marsoumi predictedthat “taxes, fees and debt would rise, and foreign reserves in the Central Bankof Iraq (CBI) would face significant pressure, particularly in the absence of asovereign wealth fund.
He also noted, “The Ministry ofFinance might struggle to fund salaries in the next two months, potentiallyleading to delays or reductions in salaries if the barrel price remains in the$70 range for six months.”
Last week, Basra heavy and mediumcrude oil experienced significant weekly losses, with prices dropping by 7.90%and 7.60%, respectively. Basra heavy closed at $68.76, up 40 cents, while Basramedium closed at $71.76, with a similar increase.
Global oil prices also saw sharpweekly losses, with West Texas Intermediate falling by 7.9% and Brent crude byover 7.6%, amid anticipation of OPEC+ decisions.
Iraq's economy, heavily reliant onoil revenues, faces significant challenges due to fluctuations in oil prices. Economistsand the Parliamentary Finance Committee cautioned that prolonged low oil pricescould exacerbate the budget deficit and impact investment and operationalbudgets.
Additionally, experts highlightedthe need for economic diversification and alternative revenue sources toaddress the effects of oil price volatility. The role of OPEC+ in stabilizingoil prices is considered crucial for maintaining Iraq’s revenue and budgetstability.
1 IQD equals $0.00076.
