Analysis and Measurement of the Impact of Oil Price Fluctuations on Budget Vulnerability in Iraq (2005-2023) (With Special Reference to the 2023-2024-2025 Triannual Budget)

Abstract

The study aims to shed light on the role of oil in exacerbate the fragility of the Iraqi economy in general and the public budget in particular. The fragility will be analyzed through the impact of oil price fluctuations on the components of the public budget and the per capita GDP. The study also analyzes the risk to financial sustainability in addition to the indicators of fiscal solvency and domestic debt and examines the status of the annual public budget. Furthermore, it utilizes a descriptive analytical method for data on the Iraqi economy and public finance, as well as the quantitative approach represented by econometric techniques to measure fragility indicators through stationary tests and simple linear regression analysis for five econometric models over the study period, which spans quarterly data spanning from 2005 to 2023, adopted from the Ministry of Finance, Planning, the Central Bank, and international financial institutions. The study concluded that heavy reliance on oil has deepened fragilities by distortions the structure of public expenditures on one hand and public revenues on the other, exacerbating the budget deficit and weakening the achievements of financial sustainability through fiscal policy., exacerbating the budget deficit and weakening the achievement of financial sustainability through fiscal policy. The results also indicate that There is a significant positive relationship between oil prices and per capita GDP, government investments, and a weak positive relationship with non-oil revenues. Additionally, there is a weak inversely proportional relationship between oil prices and public debt, and the budget defici