The role of local funding sources in supporting the general budget in Iraq: challenges and development mechanisms

Abstract

 Domestic financing sources are a fundamental pillar upon which countries rely to support their public budgets and achieve financial and economic stability. They represent one of the most important resources contributing to the financing of public expenditures and the implementation of development programs and projects. These sources are gaining increasing importance in rentier economies, particularly the Iraqi economy, which depends heavily on oil revenues to finance its public budget. This makes it more vulnerable to economic fluctuations resulting from changes in global oil prices. Hence, the need to strengthen the role of domestic financing sources as an important tool for achieving economic diversification and enhancing the state's ability to confront financial crises becomes apparent. This research aims to demonstrate the role of domestic financing sources in supporting the Iraqi public budget by analyzing the contribution of tax and non-tax revenues, as well as revenues from the oil extraction sector, to financing public spending and achieving financial stability. The research also seeks to examine the current state of these sources and their efficiency in meeting the public budget's revenue needs for financing its public expenditures. Furthermore, it analyzes the challenges they face, whether economic, administrative, or legislative, and the impact of these challenges on the public budget's ability to achieve its economic and social objectives.The research also highlights the importance of domestic financing in strengthening the state's financial independence, as reliance on internal resources reduces the need for external financing and the associated financial burdens and economic obligations. Furthermore, domestic financing contributes to enhancing financial stability by mitigating the impact of external fluctuations and changes in oil prices and global interest rates, thereby supporting the state's ability to manage its fiscal policy more efficiently and effectively.