Iraq’s proposed budget, which has gone to Cabinet, should give it a deficit of $18.6bn dollars in 2011 and surplus in 2012, according to Kippreport.
Iraq’s huge reliance on oil will continue as it needs 2.4m barrels of oil per day next year to reach its target, said Deputy Finance Minister Fadhil Nabi. Assuming an oil price of $70, it’s looking at 95% of its revenues from oil.
If all the signed oil deals pay off, capacity should increase from 2m-2.5m barrels per day up to 4 million per day in 2013, and 12 million in six or seven years. which would rival Saudi Arabia.
It was the International Monetary Fund that calculated Iraq’s budget was likely to move in to surplus in 2012 and that this was based on conservative assumptions for exports and oil prices. The revenues are likely to be used to finance yet more reconstruction.
The IMF approved a loan payment of $740m to Iraq this month as part of a $3.7bn program, which it would not have granted had it not been convinced that Iraq was keeping the economic environment stable.
The budget must be approved not only by cabinet, but by the fractious parliament.
(Sources: IMF, Iraq Ministry of Finance, Kippreport)