Iraq Wrangling with $26.6bn Budget Deficit

By Sami-Joe Abboud for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.

Iraq’s parliament will meet Dec. 1 to continue hashing out a draft of the 2017 general budget, which currently includes a deficit that will require the country to seek out non-oil income, attract investments and eliminate alleged corruption.

So far, the draft law pegs the budget at 102 trillion dinars (about $85 billion) with a projected deficit of $26.6 billion.

The country’s finances have been hammered by low oil prices, the war against the Islamic State (IS) and, according to a citizens group, significant government waste.

Much of its budget will depend on the price of oil. Iraq received good news today when OPEC agreed to cap oil production. After two years of prices that sometimes dropped below $50 per barrel, OPEC now expects that figure to reach $55-$60, the Wall Street Journal reported. OPEC has not always followed through on its promises, however.

Parliament is trying to resolve disputes over a number of items, including the budget for the Popular Mobilization Units (PMU). The legislature voted Nov. 26 to make the Iran-backed PMU into an official government military force. Shiite parliament members supported the move, but the Sunni minority boycotted the vote.

On Aug. 31, the proposed budget was amended to increase the PMU’s allocations, which had amounted to about 6 trillion dinars ($5 billion) in 2016, but the PMU leadership said that was not enough to cover all necessities. Najiba Najib, a member of parliament’s Economics and Investment Committee, criticized the PMU on July 12, telling the media, “Allocating 25% of the state budget to the army and the PMU overburdens the budget and adversely affects the economy.”

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