Baghdad – Between plummeting oil costs, political impasse and lowered world urge for food for a bail-out, Iraq is on the cusp of monetary calamity that would pressure austerity measures and renew anti-government protests.
However officers seem remarkably optimistic, a view specialists described as being “in denial” given forecast oil crashes would price Iraq two-thirds of its web revenue this yr.
Brent oil costs tanked this week to $26 per barrel, the bottom since 2003, following a success to world oil demand from the novel coronavirus outbreak and a worth battle between main producers Saudi Arabia and Russia.
Iraq, which depends on oil revenues for greater than 90 % of its revenues, was set to face “vast economic pressures,” stated Fatih Birol, head of the Worldwide Vitality Company (IEA).
Iraq is the second-biggest crude producer within the OPEC oil cartel, and sometimes exports round 3.5 million barrels per day. Its draft 2020 funds was primarily based on a projected worth of $56 per barrel.
With costs slashed, Iraq’s web revenue would drop 65 % in 2020 in comparison with final yr, incurring a month-to-month deficit of $four billion simply to pay salaries and maintain the federal government operating.
“In the current crisis, Iraq’s oil revenues will struggle to break $2.5 billion per month,” stated Birol, interesting to Iraqi officers to seek out “urgent solutions.”
That projection was primarily based on a worth of $30 per barrel earlier than the most recent drop, making it a bullish outlook.
Prime officers informed AFP the finance and oil ministries, Central Financial institution of Iraq (CBI) and state-owned banks have been exploring methods to trim prices and discover financing.
“There is some anxiety, but it’s not acute,” CBI governor Ali Allaq informed AFP.
“Oil prices will not stay at this level. We don’t expect them to go up a lot, but enough to secure the required amount,” he stated.