Creating new perspectives since 2009

Iraq approves record budget aimed at public spending and development

June 12, 2023 at 12:28 pm

Iraq Parliament in Baghdad, Iraq on October 13, 2022. [Iraqi Parliament Press Office – Anadolu Agency]

Iraq’s parliament has today approved a budget of $153 billion (198.9 trillion Iraqi dinars) for 2023, a record amount aimed at improving public services and improving infrastructure. According to Reuters, the budget deficit is estimated at a record 64.36tn dinars, more than double the last budget deficit in 2021.

The budget is reportedly based on an assumed average oil price over three years of $70 a barrel, with an average daily crude oil output of 3.5 million barrels, including 400,000 from the semi-autonomous Kurdistan region.

However, the process was beset with infighting between different Kurdish parties, reported AP. The budget which was approved six months into the fiscal year and after four chaotic late-night voting sessions allocates 12.6 per cent of the revenue to the Kurdish region in a move seen as consolidating Baghdad’s control over oil revenues.

READ: Iraq to pay $2.76 bln in gas and electricity debt to Iran

“Basic services must be secured, infrastructure rehabilitated, employment and work opportunities provided, affected areas reconstructed and the suffering of displaced people ended,” insisted the Deputy Speaker of the Iraqi Council of Representatives, Shakhwan Abdullah Ahmed.

However, some observers have cast doubt over Iraq’s rising fiscal deficit, despite the increased budget. Ahmed Tabaqchali, a visiting fellow at the London School of Economics Middle East Centre, was quoted by Al Jazeera as saying: “The more you increase this kind of spending, the more you increase your vulnerability. The oil price has to go higher and higher just to sustain spending which is crippling and will lead to more and more borrowing.”

The passing of the budget has been seen as a political victory for Prime Minister Mohammed Shia Al-Sudani’s government, which was formed last year following prolonged political uncertainty and instability in the wake of the 2021 elections and widespread protests against the government’s economic mismanagement and corruption.