Analysis of the fiscal space in the Iraqi economy and the possibilities of measuring it for the period (2004-2019)

Abstract

The Iraqi economy is rentier (unilateral) largely dependent in financing its expenditures on rentier revenues, which are vulnerable to external shocks and are unstable, and for this, it requires the provision of financial capabilities to sustain spending and finance investment, for this it is essential to know those financial capabilities and observe the abilities that provided by the economy, which is one of them is the fiscal space, that the state can after obtaining it, execute its spending and development policy in order to achieve the economic stability that it seeks. By analyzing the public debt index, it was found that its fiscal space is weak, as the rate of this fiscal space for years of study was (-22.1926%) over the permissible ratio Addressing this requires reducing and amortizing debts, especially external ones, and obtaining grants. As for the foreign reserves index, it is distinguished by the exploitation of its fiscal space, as the rate of the exploited fiscal space reached (32.309%), and this indicates an increase from the prescribed percentage (20%) of the gross domestic product, and this requires its preservation as well as its development. As for the net budget index, most years of study formed a surplus, thus it provides an important fiscal space for the economy. This should be directed to financing development and investment projects that achieve returns that enhance the financial ability of the economy. It also requires improving the work of financial policy in order to achieve the correct direction of resources and control the efficiency of the correct use of them.