Tag Archive | "Budget"

The latest Iraq Economic News – 2012 investment budget, infrastructure projects and more – brought to you by Iraq Business News

Iraq Faces Budget Cuts

By Omar al-Jaffal for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Sana al-Khafaji, an employee in Iraq’s Ministry of Construction and Housing, was surprised by the $100 deduction from her monthly salary paid by the Iraqi government, following news about an expected government austerity plan to be adopted by Haider al-Abadi’s government to reduce the waste of public funds and compensate for the substantial expenditures of the previous government.

The state of austerity that Iraq is about to face is also caused by a drop in crude oil prices and the multifront war against the Islamic State (IS) in several provinces north and west of Baghdad.

In an interview with Al-Monitor, Khafaji predicted an [even] higher salary deduction. “This is what we hear every day,” she said, but the deduction from her salary was made on the amount received as a bonus and not from her fixed basic income.

Rumors are being spread across Iraq that the continuation of the war on IS will surely lead to a salary deduction of government officials who make up around 4 million public employees. This will also result in a hiring freeze of new employees.

However, the economic adviser to Prime Minister Haider al-Abadi, Mazhar Mohammed Saleh, denied any knowledge of salary cuts of civil servants in the ministries.

Saleh told Al-Monitor, “The implementation of an austerity plan will not be easy to interpret and we cannot foretell the situation in a short period.”

Posted in Banking & Finance, Construction & Engineering, Public WorksComments (7)

Iraq Budget Based on $70/barrel

By John Lee.

Finance Minister Hoshiyar Zebari said he will soon present his proposed 2015 budget to Cabinet, based on an oil price of $70 per barrel.

The Minister said:

We are proposing a budget of $100 billion. This is projected …

“We have based our projections on about $70 a barrel. This could fluctuate. You have no assurances or guarantees.”

The government was not able to present a 2014 budget.

(Source: Arab News)

Posted in Oil & Gas, PoliticsComments (12)

Time to Bite the Bullet

If Iraq didn’t face enough challenges already, the slump in the price of crude oil is another unwelcome development for the new Abadi government to deal with.

At a current price of $81.78, the benchmark West Texas Intermediate (WTI) crude is down nearly 25 percent from its June high, driven in part by a strong US dollar and weak Chinese demand.

This comes at a time when Iraq needs all the funds it can get to bolster its defences and eventually eliminate the existential threat from the Islamic State.

As difficult as it will be, Iraq’s parliament must finally agree a budget for this year based on the unpalatable reality that it is now facing.

It must also bite the bullet and accept that in order to fund the war for its survival, public sector cuts will be needed in 2015, and that it may have to run a budget deficit.

A devaluation of the Iraqi dinar is one possible consequence of a budget deficit, but this would also help the balance of payments and leave Iraq in a more competitive position.

Ignoring the budget problem won’t make it go away.

(Flag image via Shutterstock)

Posted in BlogComments Off

“Soaring” Public Spending hits War Financing

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)

Posted in Banking & Finance, SecurityComments Off

Budget Problems go Beyond Erbil-Baghdad Crisis

By Harith Hasan for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Iraqi parliament still has not been able to approve the draft general budget for 2014, prompting Prime Minister Nouri al-Maliki to warn of the possibility of a major financial crisis and a disruption of state institutions.

This delay in ratifying the budget is mainly because of the continuing dispute between Baghdad and the Kurdistan Regional Government (KRG) regarding Iraqi Kurdistan’s share of the budget. According to a member of the Maliki-led State of Law Coalition, the Kurds are demanding a 17% share of the budget, without deducting the revenues they obtain from the approximately 400,000 barrels of oil the region exports daily according to Iraqi government’s calculations.

Baghdad is demanding that Iraqi Kurdistan places its oil exports under the direct supervision of the State Oil Marketing Organization (SOMO), which is under the authority of the central Iraqi government. The Kurdistan Region of Iraq, however, refuses to do this. For their part, the Kurdish forces argue that the central government is disregarding the constitution, which grants the region the authority to supervise its own resources, and that Baghdad is trying to deduct from Iraqi Kurdistan’s share, which was decided upon in previous budgets.

These forces held a meeting in Erbil on Feb. 23 and issued a statement confirming the region’s right to “receive its share of Iraq’s revenues.” The statement noted that negotiations with Baghdad on this issue are ongoing and called on Maliki to abandon this “illegal and unconstitutional policy.”

An “independent” report on the Iraqi budget prepared by the Movement for Change (Gorran) noted that the actual share the budget grants to Iraqi Kurdistan is 9.9%, and that the government expects the region to export what amounted to 400,000 barrels per day under its supervision, compared to 250,000 a day last year.

According to the report, the government is demanding that auditing agencies from both Baghdad and Erbil identify and calculate Kurdish oil revenues, and that Erbil sends the amount to Baghdad on a monthly basis. These are conditions that the KRG considers to be unfair.

Posted in PoliticsComments (1)

Draft Budget Fuels Kurdish Export Row

Kurdish ministers have reportedly walked out of a cabinet session in protest at the country’s draft 2014 budget.

Reuters reports that the draft budget requires the Kurds to export 400,000 bpd, well above the region’s current export capacity, and says Baghdad will deduct any shortfall from the 17 percent share of state revenues to which they are entitled.

Industry sources estimate Kurdistan’s current export capacity at around 255,000 bpd, and do not expect it to reach 400,000 bpd until the end of this year or early 2015.

Kurdish members of parliament boycotted last year’s budget, but this did not prevent it being passed.

(Source: Reuters)

(Budget image via Shutterstock)

Posted in Banking & Finance, Oil & Gas, PoliticsComments Off

Govt Allocates $14bn for Electricity

By John Lee.

The Ministry of Electricity’s 2013 budget has soared to $14 billion to help it end power outages in the country, reports Azzaman.

But the ministry’s spokesperson Musaib Mudaris said the blackouts will continue until the end of the year, by which time output will reach 13,000 megawatts, enough to meet the country’s domestic needs.

Mudaris said half of this year’s allocations were invested in power plants and enhancement of the national grid.

The ministry’s operating costs amount to $7 billion a year, he added.

Mudaris also revealed that Electricity Ministry’s budget in the years from 2003-2012 had amounted to $37 billion.

Currently, he said, Iraq’s combined power output was in the range of 11,000 megawatts, still short of the country’s total needs, estimated at 13,000 megawatts.

However, many in Iraq doubt whether the ministry will be able to put an end to outages any time soon, given the precarious security situation and the dramatic increases in demand due to improved living standards.

However, Mudaris insisted that the country to be able to produce up to 20,000 megawatts by the end of 2014.

(Source: Azzaman)

Posted in Construction & Engineering, Oil & Gas, Public WorksComments (1)

Oil Production Fall Could Create Budget Deficit

By Matthew Gayle.

Iraqi parliament Oil & Energy Committee member, MP Suzan al-Sa’ad, recently stressed that the country’s decline in crude oil production during 2013 will lead to major deficit in the federal budget of 2014.

According to a report by the Oil Ministry, Iraq oil exports decreased at average of seven million barrels in June, following the sabotage of the northern pipeline and the bad weather.

The spokesperson of the Oil Ministry, Asim Jihad said some days ago that the oil exports for past June decreased to 69,800,000 barrel, at average of 2,326,000 barrel a day, while the oil exports reached in past May 76,900,000 barrel per day.

(Source: All Iraq News)

Posted in Oil & Gas, PoliticsComments Off

IBN Newsletter 'FREE Weekly Subscription'

Advertise with IBN