By Mustafa al Kadhimi for Al Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the opinions of Iraq Business News.
On Dec. 23, Iraq's Cabinet approved and submitted the 2015 federal budget to parliament. This development occurred following months of study to review and reduce the initial budget’s large deficit, which Finance Minister Hoshyar Zebari estimated at $40 billion.
Iraq’s government has certainly tried to address the deficit in the version that was approved on Dec. 23, in which the budget reached 123 trillion Iraqi dinars (nearly $100 billion). Yet, in the end, all of these attempts cannot address Iraq’s budget crisis for 2015 or the following years, given the nature of the Iraqi economy, which mainly depends on oil production, as well as the ongoing failure to achieve alternative economic mechanisms.
The sharp decline in oil prices, which reached $70 per barrel in December and are expected to continue falling, was enough to plunge Iraq into a real financial crisis, according to deficit rate estimations, which in 2013-14 were based on an estimation of nearly $80-$90 per barrel.