By Omar al-Shaher forAl-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.
The strenuous efforts exerted to handle the housing crisis were quickly rendered useless when the ratified 2013 general budget did away with the allocations for the housing fund, which was to grant loans for those wishing to build new homes.
The Iraqi parliament ratified the 2013 general budget on March 7 after a heated debate among involved parties regarding the share allotted to the semi-autonomous Kurdistan region. The budget did not include any housing allocations, which were held back until an increase in oil revenues is seen.
The housing fund is set out by the Ministry of Construction and Housing. The biggest real-estate funding body in Iraq, with a capital of one billion Iraqi dinars ($900 million), the housing fund was established specifically to solve the housing crisis.
The fund grants zero-interest loans in monthly payments with a ceiling of $30,000 for those wishing to build a private home in the Iraqi capital. Should the construction take place in other provinces, the loan limit drops to $25,000. The 2013 budget stipulated that allocations for this fund would come from the surplus in oil revenues, instead of from fixed budget lines.
This surplus, however, is not expected to be reached until the middle of the next fiscal year, which means that the fund will not receive any money in the coming months.
Director-general of the fund Burhanuddin Bassam affirmed that the fund would not accept new loan applications from any of Iraq’s provinces. He stressed that the available money could only cover the payments due to applicants who had already registered.
The Iraqi parliament passed the 2013 budget of the 138 trillion Iraqi dinars ($118.5 billion) on Thursday, allocating to Kurdistan just a fraction of the oil revenue the region requested, reports Wall Street Journal.
Ibrahim al-Mutlaq, a member of the parliamentary finance committee, said the budget allocates 750 billion Iraqi dinars ($644 million) for oil companies operating in the semi-autonomous region, which include majors such as Exxon Mobil, Gazprom Neft and Chevron; the Kurdish government had asked for $3.5 billion, including outstanding payments covering all exports between 2010 and 2013.
The budget decision adds to existing tensions between the Kurdish region and Baghdad over oil exploration rights, trade with Turkey and the redevelopment of oil fields in a disputed territory.
Kurdish lawmakers boycotted the session which led to the passing of the budget, Mr. al-Mutlaq said.
Jaber al-Jaberi, an Iraqiya MP among those who boycotted the session, said he expects the Kurds to go to the federal court to disrupt the budget.
The Speaker of the Iraqi Parliament, Osama Al-Nujeifi [Usama al-Nujaifi] (pictured), said on Thursday that negotiations with leaders of the political blocs on the state budget for 2013 have entered a “blind alley”, according to KUNA news agency.
He blamed the deadlock on disputes among the parliamentary blocs on allocations for the development of regions and financial dues of companies working in Iraqi Kurdistan.
Talks between the political blocs had reached a dead end, he said, and parliament should sending the budget back to the government to increase the expenditures, or “use its right in moving the moneys within the budget’s items”.
The Iraqi Institute for Economic Reform (IIER) has the pleasure of inviting you to attend the above seminar to discuss the details of the Federal Budget and the challenges facing its implementation.
In attendance there will be Members of Parliament, government officials, Iraqi economic experts, academics as well as Civil Societies representatives. The seminar will be covered by national and international media.
One of the speakers will be Dr Kamal Al Basri.
The seminar will be held on Saturday 23 February at Alwiyah Club, Baghdad
Start promptly at 9:30 am
If you wish to attend please send an email to: email@example.com, or telephone +964 1 7788842, during working hours. Please note the conference will be covered by all media. Please visit our website nearer the time. For more information visit www.iier.org
The United Nations’ Joint Analysis Policy Unit (JAPU) has issued a background paper on Iraq’s budget for 2013.
The Government expenditure for 2013 totals IQD 138.4 Trillion ($ 118.3 Billion), with an increase of 18% over 2012 and exceeding 70% of GDP. The budget has three main headings: Energy, Security / Defense and Social Services, accounting for 21%, 14%, and 13% respectively of total budget.
Investment Expenditure represents 40% (IQD 55.1 Trillion) of government budgeted expenditure, the largest ever for Iraq. Investment in Oil and Electricity amounts to over 43% of the investment expenditure.
Government budgeted revenues amount to IQD 119.3 Trillion, with revenues from oil making 93%. The increase in oil revenues, made it possible for the government to cover its operating expenditure and allocate more to investment, yet heavy reliance on oil resulted in a budget fragile to oil shocks, and government going through complementary budgeting, and excessive delays in investment projects implementation.