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Volume :2 Issue : 6 1976      Add To Cart                                                                    Download

THE FIELDS OF EXPENDING OIL REVENUES IN IRAQ (1944/45 – 1970/71)

Auther : Dr. Ali Khalifah Al-Kuwari

 

          The major purpose of this comprehensive study of the field of oil revenues expenditure in Iraq is to examine the size and the percentage of oil revenues assigned to each sector of the general expenditure during the period 1944/45 – 1970/71.

          The author classifies the general income and the general expenditure sectors and then deducts the size of the oil revenues allocated to cover the different sectors of the general expenditure.  He found that the oil revenues in that period comprised 53.7% of the total general income, and that 52.7% of this revenue had been allocated to economic planning, while the rest was left to the common budget.  As for the non-oil income, the researcher found that it comprised 46.2% of the total general income, and that 94% of this non-oil income had been allocated to the common budget while the economic – plan budget received the remainder (6%).

          He found that the structure of the general income witnessed tangible changes during the period under study.  In 1944, for instance oil revenues comprised 11.7% of the total general income while the current income of the common budget comprised 88%. By the 1950’s however, this percentage changed to 60% and less than 40%, respectively, whereas the non-oil income of the economic plan comprised a percentage of 0.5 –2.3%.  In the late 1960’s, the size of oil-revenue participation in the total general income decreased again to little more than 50%, whereas the current income of the common budget grew to more than 40%, and the non-oil income of the economic plan increased to 1.7 – 10.5%.  Since late 1970, however, oil income has begun to occupy the first post due to vast increases in oil revenues. 

          By examining the available statistical tables, the researcher found that in the period under study expenditure on the common budget had consumed more than 70% of the general expenditure, leaving about 29.4% to the economic planning budget.  In the meantime, expenditure on defense and security occupied the first post, consuming 29.9% out of the total general expenditure while, expenditure on the economic-plan budget, social services, economic services and administration consumed 29.4%, 17.8%, 8.9% and 8.3% respectively.  The researcher also found that the relationship between the increases in oil revenues and the size of general-reserves allocation in the period under study had been an imbalanced and weak relationship. 

          The researcher then draws a comparison between the patterns and policies of allocating oil revenues in Iraq, Kuwait and Bahrain.   Despite the differences in percentages in different sectors, the researcher found a close similarity between the economic effects of each of the patterns followed in these countries.  For instance, the allocations of the common budget in the period under study consumed out of the total oil income a percentage of 70% in Iraq and 77% both in Kuwait and Bahrain while the economic planning budget received 30% in Iraq and about 20% both in Kuwait and Bahrain.  Moreover, both Kuwait and Bahrain allocated 11% and 2% respectively out of the total income to their general reserves. 

         As for the changes in the percentages of allocations, the researcher discerned a general trend in these three countries towards increasing the allocations of the common budget at the expense of the other fields expenditure.

        Therefore, the researcher considers it of great importance to study the factors underlying such a problem as a first step towards establishing a closer relationship, between oil revenues and economic-development requirements.

        Finally, the researcher suggests a new oil policy based on:

1. Considering oil wealth as a source of raw material, energy and foreign exchange which is urgently needed by the national economy to promote productive capacity.
2. Blocking the percentage allocated of the total oil income to cover the deficit in the common budget as a first step towards enabling the government to balance the common budget within a transitional stage without depending on oil revenues.
3. Limiting crude oil exports (after transitional stage) in accordance with the amount of foreign exchange required for the national economic development.

 

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