The Importance of Using Fiscal Policy Tools to Address Oil Price Volatility

Аннотация

The Iraqi economy is one of the prominent rentier economies, as it depends largely on oil sector revenues as a major source of hard currency. This has resulted in a set of impacts on the general economy, as the growth of public revenues in the federal budget of the state and the gross domestic product depends on the fluctuations of crude oil prices in the global market, which in turn affects oil revenues. In addition, these fluctuations directly affect the management of public spending by the state, making it difficult to reduce it. There is still an ongoing debate about the causes and motives of these fluctuations. Accordingly, the Iraqi government faces great difficulties in preparing the state's general budget, if there is a decrease in oil revenues. Hence, the necessity of diversifying sources of public revenues in the federal budget and supporting and developing other economic sectors in Iraq that are suffering from an almost complete halt at the present time, and benefiting from them in financing the general budget revenues, in addition to getting rid of or reducing dependence on oil sector revenues.