The Iraqi government is increasing spending by about 25% next year to USD98.45bn, but higher oil prices will still allow it to balance its books for the first time, reports Reuters.
Next year’s budget will be based on an oil price of $85, due to consistently high oil prices at $100 or more. Even after spending increases, this will cover this year’s deficit and still bring next year’s budget up into the black
This year’s budget is around $80bn based on an average oil price of $76.50 per barrel and 2.2 million barrels per day in exports.
“We expect the rise in revenue coming from the difference in the (projected) oil price will be enough to cover the deficit planned in the 2011 budget,” al-Esawi said. “Any increase in oil prices or a rise in oil production will be allocated to cover the deficit.”
Next year’s budget, if approved by cabinet and parliament, will allocate an additional $34bn for investments. At $85/barrel, the new budget will cover this and wipe out the deficit of $13bn this year.
Central bank governor Sinan al-Shibibi told Reuters that Iraq GDP excluding the oil sector will grow by 6 percent in 2011, as fast as the current core inflation rate of 6.1%. Add oil in, and GDP growth could be 12%, and that will also be the goal for next year.