- Title: Iraq to halt projects and borrow abroad to offset oil crash
- Date: 22nd March 2020
- Summary: (SOUNDBITE) (Arabic) PROFESSOR AT BASRA UNIVERSITY OF OIL AND GAS, ANSAYIF JASSIM AL-ABADI, SAYING: "Iraq doesn't have an economy, we are only a rentier state, we sell oil and we live on its revenues. From 2003 up until now. There were many voices calling for diversifying sources of income, sources of wealth, mainly the circumstances are suitable now. There is agriculture, there is industry and there is tourism that could be developed. But our politicians focus on the political side and political conflicts on posts and leave the subject of developing and diversifying the Iraqi economy."
- Keywords: COVID-19 Economy Health Iraq Iraq protests coronavirus
- Reuters ID: LVA003C64UDLH
- Location: BASRA, IRAQ
- City: BASRA, IRAQ
- Country: Iraq
- Duration: 00:00:31
- Aspect Ratio: 16:9
- Topics: Budget/Taxation/Revenue,Government/Politics
- Story Text: Iraq will have to shelve most development and energy projects and borrow abroad to ensure it can pay public servants and food imports if an oil price crash continues, officials and lawmakers said.
The OPEC oil producer, which depends on oil revenue for 95 percent of its income, will have no choice to cut spending due to the spread of coronavirus and the collapse of an oil output deal between OPEC and its allies, they said.
Such a move is likely to fuel more dissent as Iraqis have been protesting for months against an elite they accuse of depriving them of basic services such as power supplies or decent hospitals despite the country's oil wealth.
The crisis has hit Iraq at a time when it is rudderless after Prime Minister Adel Abdul Mahdi quit late last year over the protests and divided lawmakers have been unable to agree on a replacement. The coronavirus outbreak has been spreading from neighbouring Iran, the epicentre in the region.
Due to infighting, parliament has failed to approve a budget draft for 2020, which is now outdated anyway based on an oil price of $56 a barrel, almost double the current level.
"Now when the budget was based on a price of $56 per barrel, it was basically suffering from a deficit. So what about now when prices dropped even further," professor at Basra University of Oil and Gas, Ansayif Jassim Al-Abadi, said.
Haitham al-Jabouri, head of the parliament's financial committee, also said borrowing abroad would be the only way to avert a huge financial crisis.
Iraq will have to postpone key energy projects such as the southern mega-deal including developing oilfields, expanding storage, transport, and export infrastructure, and building byproduct gas treatment units.
At risk are also projects to boost power supplies and revive Iraq's industrial sector, a plan pursued since security has relatively improved after the defeat of Islamic State militants in northern Iraq in 2017.
(Production: Mohammed A'ty, Maher Nazeh, Mohammed Katfan)
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