Iraq’s public finances face many challenges, the most prominent of which is the lack of a clear account for managing state resources clearly, which is known as the “unified treasury account”.
The office of the Iraqi Prime Minister, Muhammad Shia’a al-Sudani, announced that the application of the “unified treasury account” system was discussed in meeting It was held, Thursday, in the presence of officials responsible for monetary and fiscal policy.
Al-Sudani stressed that the application of this system “will contribute to reducing corruption … and will allow the government to view the actual daily balance to determine its expenditures instead of distributing them to more than one account … and settling accounts and removing duplicates from them.”
The unified treasury account “is one of the practices in payment systems, tax revenue collection and spending control, through central dealing with government bank account balances… It is part of financial management information systems solutions… It is usually done by the central treasury or the public accountant in the Ministry of Finance.” , according to study Report of the Treasury Single Account Rapid Evaluation Administration published by the World Bank.
Why did Iraq delay in applying this system?
Professor of International Economic Relations at the Iraqi University, Abd al-Rahman Najm al-Mashhadani, explains that “Iraq is still operating with the financial systems that were established since the days of the civil ruler, Paul Bremer, which allow departments and institutions to open separate accounts for them and manage their financial affairs separately.”
He added in an interview with “Al-Hurra” website that the lack of a unified treasury account “constitutes an imbalance in the revenues of the general budget, for example, institutions such as customs and tax have separate accounts in which revenues are deposited, and allocations for their expenditures remain from the treasury.”
The International Monetary Fund affirmed that the “sound financial framework” in Iraq is “a critical element in overcoming economic challenges,” as “policy-makers should be careful to find a balance between the goals of saving exceptional and unexpected oil profits, in order to enhance the ability to withstand in the face of The volatility of oil prices in the future, the increase in social spending is very important, and spending on public investments, while gradually reducing the level of dependence on oil.
added in statement, Late last December, that “the implementation of the public finance framework… must be accompanied by sustainable efforts,” which include “raising the efficiency of public finance management, especially by establishing the unified treasury account, and implementing the Integrated Financial Management Information System (IFMIS), on an urgent basis, In addition to strengthening control over contingent liabilities and liabilities.
The Iraqi economist, Salam Sumaisem, attributed Iraq’s delay in implementing this system to “the multiplicity of decision-making bodies in Iraq, and the fragmentation of powers in some years.”
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In response to the “Al-Hurra” website’s inquiries, she confirmed that in some years there was “technical weakness in the bodies that are supposed to supervise financial management, which helped disperse budgets in a way that affects their safety, performance, and transparency.”
What does the “Treasury Single Account” application mean?
Sumaisem believes that issuing a government order to implement the “unified treasury account will show the flows of funds in a unified and clear manner, whether in terms of revenues or expenditures.”
For his part, Al-Mashhadani expects that if this system is implemented, “the federal government’s revenues will rise by more than 50 percent, and corruption may be reduced if the various administrative systems are modified to become automated.”
The call to implement this system coincides with the issuance of arrest warrants against former officials, on Friday, on charges of corruption related to the tax secretariat case, which has become known as the “theft of the century.”
With regard to the recent arrest warrants, documents revealed the seizure of $2.5 billion, through 247 checks disbursed by five companies, between September of 2021 and August of 2022, but the money was withdrawn in cash from the accounts of these companies whose owners are subject to arrest warrants.
The case, which was revealed in mid-October, and involving former senior officials and businessmen, sparked outrage in oil-rich Iraq, where corruption is rampant.
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Al-Mashhadani asserts that “the application of the unified treasury account has become a necessity, in order to better clarify the revenues that reach the treasury, determine the productivity and expenditures of institutions, and control financial management.”
Al-Mashhadani believes that there may be obstacles, but “in the event that this system is implemented, all government institutions will be obligated to transfer their revenues and disclose their expenditures clearly, while many private accounts in which government revenues were deposited will be closed.”
Economic analyst, Alaa Al-Fahd, explains that approving and applying the “unified treasury account” is an important part of “the economic reform that the Iraqi government seeks, which enhances transparency and reduces some shortcomings.”
Al-Fahd added, in an interview with Al-Hurra, that “the financial management infrastructure during the current time has become more suitable for the application of this system, which will be reflected in the rank of Iraq in many international reports and enhance the indicators of financial solvency.”
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For his part, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, reviewed the benefits of establishing the unified treasury account, noting that it is “an essential tool for unifying and managing the resources or cash flows of the central government,” according to what was reported by the official Iraqi News Agency.conscious“.
He stressed that “the effective oversight of the financial administration cannot achieve its goals in controlling public money unless it relies on unified and undivided government banking arrangements,” not to mention reducing borrowing costs, revealing “that the Iraqi government borrowed a lot from government banks in the past years to bridge the deficit in The annual budget, and the sources of that borrowing were mostly surplus government deposits in various government accounts.
Iraq’s internal public debt is about $50 billion, 63 percent of which is held by the Central Bank of Iraq and represents local assets in the structure of the central bank’s balance sheet, according to Saleh’s previous statements.
Saleh explains that “the unified treasury account comes as a necessary condition for completing the digital system for managing financial information IFMIS,” stressing that the integration of these two projects “will control the daily cash flows of the state’s public treasury at the highest levels of governance, discipline and financial accountability.”
