By John Lee.
The Financial Times reports that a looming fiscal crisis is threatening to limit Iraq’s ability to finance its war against the Islamic State insurgents.
This is despite the country having large oil revenues, billions of dollars in reserves and surplus funds left from unexecuted projects.
In recent years, expenditures have “skyrocketed“, with the public payroll, and food and energy subsidies, taking up 70 percent of the public budget. In addition, as much as $500 million is needed every month just to feed the 1.75 million internal refugees who have been displaced in the war.
Baghdad also owes billions of dollars to the Kurdistan Region. The situation is not helped by the fact that parliament has yet to agree a budget for this year, at a time when oil prices have dipped below $90 a barrel.
Ashraf Abdelaal, the economic affairs officer for the UN mission to Iraq, told the FT:
“The IMF and the World Bank will not give Iraq one dollar until the budget has been approved … Credibility in the Iraqi system does not exist any more.”
(Source: Financial Times)
(Austerity image via Shutterstock)