Wednesday, January 09, 2008

Budget mysteries of the IMF

It was noted in the comments a few posts back that the Iraqi government signed a new agreement with the IMF on December 20, and that the IMF announcement included some of their usual language about government-commitments to austerity in current government spending. Including this, from the IMF director's homily:
The [Iraqi] authorities' program for 2008 aims to allocate resources towards investment, including in the oil sector, and to improve the provision of public services, while containing current government spending, notably on the wage and pension bill. The program—which envisages an increase in economic growth, a further reduction in inflation, and an increase in net international reserves—will also encompass priority structural reforms, including actions to strengthen administrative capacity and governance.
An announcement earlier in December about cutbacks in the number of items and the volume of each item to be included in the 2008 food-rations program seemed to dovetail with this. But it appears no one (except the commenter here) noticed the role of the IMF in this.

However, people's very understandable unhappiness with the food-cutbacks themselves was noticed by an Iraqi parliamentary official, and he makes some ambiguous remarks to the government newspaper Al-Sabah this morning about this. He said parliamentarians have been meeting with ministerial officials about 2008 budget, and they agreed on two points. The first on government salaries (to be discussed in a moment), and
The second point on which they agreed was on leaving the number of ration-card items unchanged, and on working to see that the rations reach citizens at the scheduled times, and he [the parliamentary official] disclosed that there will be a clause in the budget stating that the Finance Ministry will undertake guarantees of the expenditures necessary for the provision of the ration-card items in 2008.
The problem is that this isn't a question of "efforts" and "guarantees", but rather one of budgetary allocations. The earlier report on the cutbacks said the Trade Ministry had asked for $7 billion for the program, and had obtained only $3 billion, hence the cutbacks. Today's weasel-words by the parliamentary official in the government newspaper don't deal with that, and the puzzle of how much is allocated to the food program in 2008 remains, along with the question of IMF pressure on that budget. (Moreover, "leaving the number of items unchanged" is itself ambiguous, because it doesn't spell out whether this means "unchanged" at five items, or "unchanged" at the original ten or eleven).

The second piece of the budget puzzle has to do with government salary scale. As you will note from the above remarks by the IMF director, the Iraqi government agreed to cut current spending on government salaries. But what the parliamentary official says in Al-Sabah this morning doesn't seem to fit. He says in the meetings between parliamentarians and government officials, there was agreement on a new pay-scale, and on allocation of an additional $3 billion in the 2008 budget to cover the increased cost of this. At least that's what I think he said. Here is the quote. See if you agree:
[At these parliamentary/ministerial meetings] there was a prominent group of observations that will be included in the 2008 budget, namely the new pay-scale [for government employees] approved by the Council of Ministers, and there will be inclusion of $3 billion in the 2008 budget for the application of that.
The journalist adds by way of background: The Council of Ministers announced last week the new government-employees pay-scale, which will take into account years of service, educational degrees, marital status, location and so on.

These seem like fairly simple questions: How much money is actually in the 2008 budget for the food program; how does this compare to 2007; and what was the effect of IMF pressure on this? And given the IMF remark about the commitment to cutting spending on salaries and pensions, how can we understand the $3 billion in the 2008 budget for the "application" of the new government pay-scale?

Would it be too much to expect that somewhere in the Washington media establishment somebody might be able to dig up the actual text of last month's IMF-Iraq agreement, or of the 2008 budget? Or is this sacred ground.


Post a Comment

<< Home