Public Expenditure And Its Impact On Some Macroeconomic Variables In Iraq - A Standard Study For The Period (2004-2022)

Abstract

The research aims at the impact of public expenditures on certain macroeconomic variables in Iraq for the period 2004-2022, by building a standard model showing the impact of public expenditures on certain macroeconomic variables in Iraq for the period 2004-2022.

One of the main findings of the research is that public expenditures are among the most important and effective instruments of fiscal policy in achieving economic growth, especially investment expenditures. Public expenditures have fluctuated considerably during the period of research and investment expenditures have not received the intended percentage. As well as remaining high unemployment, especially disguised unemployment, and thus the low role of public expenditures in addressing structural imbalances in the Iraqi economy and hence the desired economic instability. This is what the research hypothesis has been, and in case public expenditures are squeezed, as was the impact of the global financial crisis in 2009. As well as the twin crises of 2014, 2020), the trade-off between current and investment expenditures usually goes to sacrifice investment expenditures at the expense of current expenditures. The latter relates to wages and salaries, a paragraph that is difficult to prejudice. Therefore, investment expenditures are often sacrificed, through which some of the Government's programmers can be abandoned impacts on members of society are indirect and intangible, other than the reduction of current expenditures directly affecting individuals, which is usually avoided by Governments, However, it was easier in cases of popularity, revenue growth and the resulting escalation of expenditures, in such cases the increase included general expenditures (Consumption and investment), as well as slower growth of public revenues and unmatched growth of public expenditures, as a result of the heavy reliance on oil revenues, which account for more than one percentage (95%) of the total public revenues, due to the volatility of its prices in the global markets and the reflection of those fluctuations on the public revenues positively and negatively, and then intuitively the impact of those revenues on the amount of the general budget, This raises concerns about the future of Iraq's economy unless the Government makes urgent and politically and economically effective decisions, and the general budget has suffered a continuing deficit in a number of years. The deficit is due to the expansionist approach of the Convention's policy in the Iraqi economy, the volatility of revenue growth and its incompatibility with public expenditures. The instability of Iraq's political reality, coupled with the decline in oil prices, Due to the decline in global demand, which coincided with the coronavirus pandemic, creating a deficit in the public budget and an economic crisis that may continue and worsen and will be the biggest losing citizen. The coronavirus pandemic and its repercussions on the Iraqi government, especially the oil sector, and its subsequent economic and financial impacts are the stop of reviewing economic reality and changing fiscal policies during the previous period. The Iraqi economy has the potential to be exploited in order to improve Iraq's economy and confront deficits and financial risks.

The study recommended: the need to diversify public revenue sources and not rely on a single source of oil, that is, to create more than one source of public revenue financing by adopting innovative financing methods. In order to avoid the associated effects on fluctuations in oil prices, as well as the need to rationalize public expenditures and avoid waste of expenditures by activating the role of financial control, fighting financial corruption and eliminating unnecessary expenditures, as well as the need to restructure public expenditures and adopt policies that prioritize the expansion of investment spending and reduce current expenditures (Consumer) for its important role in expanding the productive capacities of the Iraqi economy and addressing the problems of the Iraqi economy, particularly unemployment, and the need to support non-oil productive sectors (Industrial and agricultural) through optimal use of resources, which contribute to the provision of goods and services in order to enhance the local economy's ability to cope with volatility and external crises. As well as operating available labor force components, thus achieving economic stability, as well as working to alleviate the general budget deficit by pursuing a comprehensive reform policy in accordance with a comprehensive and integrated plan or programmer to rebuild Iraq's economy. Reduce financial and administrative corruption and the public sector's engagement with the private sector in the preparation of short- and long-term plans and programmers to eliminate unemployment in Iraq because of its negative effects on social and security realities by increasing investment in core projects that result in reduced unemployment rates and the further development and rehabilitation of human capital, as well as its active contribution to the development and growth of the economy.