Analysis of the Iraqi budget and the effects of the expected deficit in economic growth

Abstract

        Fiscal policy holds an important place among macroeconomic policies, as it is a key tool that the government can use to guide the course of economic activity. However, fiscal policy in developing countries in general and Iraq in particular is characterized by significant structural imbalances, since the general budget of the state relies heavily on a limited single source to get a significant portion of the public revenue, namely the oil sector, in addition to the imbalanced public expenditure , which has been a result of a more focus on the current expenditure than on investment. Current expenditures has represented the bulk of public expenditure as whole.

         Because of the rent nature of Iraq's economic system, it has become one of the economies that suffer from structural imbalance due to growing economic focus on the oil sector, decline of productive and commodity activities, rise of service sector, decline of tax contribution to public revenues, and the difficulty facing tax and customs administrative control. Moreover, as a result of financial and administrative corruption, the budget can no longer be financed by sovereign sources of financing.  It has depended on oil revenues,  in the light of the lax contribution of the rest of the sectors to total public revenues.

    The research aims to know the details concerning the general budget in Iraq by addressing the budget's outcomes in order to know the effects of deficit on Iraq's economic growth during the 2003_2019 period. It focuses on the sectoral effects of budget deficit that may hit the economy in the long term