Iraq approves 2017 budget to Kurdish objections

Iraq’s parliament approved the 2017 budget today, lawmakers said, but a member of the Kurdish KDP said his party stayed away from the vote and differences between Baghdad and Kurdish authorities in the north had yet to be resolved.

A copy of the budget document said it was based on projections of an oil price of $42 per barrel and exports of 3.75 million barrels per day (bpd), including 250,000 bpd from oilfields in the Kurdish controlled region.

The deficit was forecast at 21.7 trillion dinars ($19 billion), with expenditure of 100.7 trillion dinars, about six per cent lower than this year’s projected spending.

“We were not present at today’s session. We had objections from the beginning and we think today’s budget does not meet our demands,” Ahmed Muhsin Al-Sadoun, head of the KDP parliamentary bloc, told Reuters.

“Passing the budget today has not resolved the disputed issues between the central government and the Kurdish region, including oil exports,” he said.

The budget also failed to allocate enough money for salaries of state workers and Peshmerga fighters in the Kurdish autonomous area, Al-Sadoun said. “It doesn’t even meet half of what is required.”

Current and former Iraqi central governments have said the Kurds have failed to respect deals to transfer agreed volumes of oil produced from oilfields in areas they control to Baghdad.

The Kurdistan Regional Government (KRG), an autonomous region controlled by Kurds, is entitled to 17 per cent of Iraq’s overall budget, and Kurdish politicians say it needs stable revenues to pay its bills, support hundreds of thousands of refugees fleeing the war with Daesh and finance Peshmerga fighters.

Failure to reach a deal on a festering dispute over oil cargos exported independently by Kurdish authorities could further complicate Iraq’s efforts to boost output and maximise oil revenues desperately needed to bridge the budget deficit.

“Now the government must find a way to reach agreement with the government of the Kurdish regional authorities,” Al-Sadoun said.

The KRG and the Baghdad-based government have fought repeatedly over budgetary issues in the Iraqi parliament. The KRG began selling oil independently through Turkey’s Ceyhan seaport, enraging Baghdad and causing it to cease sending funds to the KRG.

Erbil, the capital of the KRG, has since struggled to pay public sector workers and Peshmerga fighters for many months, in a sign of the return to divisions and conflict once Daesh is defeated in Mosul.