Despite Iraq's "historic" financial abundance due to oil sales, warnings have recently escalated of austerity that the country could see in the absence of this year's annual budget, for several reasons.
Iraq makes huge amounts of oil sales every month, generating more than $11 billion in May, while April revenues amounted to more than $10 billion.
However, the absence of a Government that is allowed to fully dispose of those funds is an obstacle to optimal investment and exploitation of oil revenues in important sectors and projects for citizens.
Differences between political blocs since the October 10th parliamentary elections have prevented the formation of a new government, while Iraqi laws prevent the current government from acting as a "caretaker government."
In an effort to address the crisis situation, the Iraqi parliament is seeking to legislate the "emergency support" law, which included spending money on several sectors, to remedy the lack of budget law, but political differences also delayed the law as it came with the support of Muqtada al-Sadr's "Save the Homeland" coalition, while the "coordination framework" headed by Nouri al-Maliki opposed the law.
In the midst of the conflict, Madhir Mohammed, economic adviser to the Iraqi prime minister, stressed the need to pass the emergency support law, warning of austerity if it is not passed.
"The proposal of the Emergency Support for Food Security and Development Act is very important in providing a ration card, strengthening strategic stocks, as well as the need to provide allocations to pay farmers' dues, in addition to providing the cost of imported oil derivatives," Saleh said in a televised statement.
Saleh warned of "austerity, fiscal hardship and inflation, which is a serious phenomenon, if the bill is not passed," which he described as "a rescue spending package to reduce any potential risks."
"The prices of fuel, gas, sugar and cereals have increased by 40 percent compared to last year, reinforcing the need to provide ration card vocabulary because of the high poverty rate," he said.
The "coordinating framework" forces appealed the law to the Federal Court, as it came from the caretaker government, which was not entitled to submit the bills, prompting Parliament to adopt the bill and reread it again and submit it by the House Finance Committee.
The political blockage disrupted the submission of bills to parliament for legislation, including this year's general budget law, which is linked to many economic and development projects funded by the government from the annual budget, in addition to the widespread negative effects on the lives of citizens.
The previous parliament was supposed to enact the 2022 budget law, but early elections and the failure to form a new government have yet to block budget legislation, causing concern among the public, particularly as Iraq's economic crisis grows.
This situation has caused delays in farmers' dues, disruption of supply card coverage and the suspension of labour-occupying investment projects, as well as the suspension of new projects that need to be included in the fiscal budget, while the current Government has remained with restricted powers to conduct daily affairs, economists warn, especially since 5 months have elapsed from the current fiscal year.
"The current financial abundance needs a quick, medium and short-term investment in order to inject the largest amount of money into the market, to move it and eliminate the unemployment that has spread among young people, where a large segment of them depend on day-to-day construction and investment projects with secondary contractors," said Sarmad al-Shammari, an economic researcher.
"Fragile groups will not be able to cope with this situation, which calls for quick remedies such as emergency support law legislation and saving it from political differences, or a parliamentary vote to allow the current government to send the budget law, an option that seems convincing," al-Shammari told Sky News Arabia.