Other proposed allocations also are controversial. The Finance Committee examined the budget in October and concluded it did not adequately address development and service projects. Members proposed revising the budget to address citizens’ needs by providing support for low-income workers, creating jobs and stimulating investment, but such changes have not been made.
Although the budget allocates $20 billion for investment projects, it halts investments in ministries except for the Interior, Defense, Health and Education ministries. The cost of the war on terrorism is responsible for a large part of the deficit, as 12 trillion dinars ($10 billion) were allocated to the Ministry of Defense.
The drop in oil prices forces the budget to depend on loans to cover the salaries of employees and retirees as well as to compensate the families of those who were killed in the fight against IS, in addition to covering the costs of fighting terrorism and providing farmers’ entitlements. Jamal Koojerthe, a member of the Oil and Power Committee, has warned that unless parliament is cautious, the country could go bankrupt next year if oil prices continue to drop.
This economic bump in the budget was noted by Ahmed Kanani, head of the Economics and Investment Committee, when he told Al-Monitor, “Oil prices have thwarted a lot of projects and plans included in the 2017 budget.”
Kanani added, “The deficit caused by the lack of non-oil revenues and the costs of the ongoing war against IS since 2014 forced important ministries, such as the Ministry of Defense, to rely on the allocations [taken from] less important ministries to cover the cost of its projects.”
Hussein Thaghab, a researcher, correspondent and head of the economics department at Iraqi Al-Sabah newspaper, told Al-Monitor, “An economic recovery in light of the financial hardship suffered by Iraq as a result of the drop in oil prices in global markets seems impossible."
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