The Iraq Energy Institute has just published a new report by Robert Tollast, Yesar Al-Maleki and Harry Istepanian on reform of public financial management in Iraq:
Iraq’s first draft budget for 2019 shows an overall increase in spending of 23% compared to 2018. Oil revenues still dominate sources of revenue, projected at 89% of government finances.
The Iraqi government, with help from international creditors, has been aiming to increase non-oil sources of income. In 2019 however, non-oil income reduces by IQD 2.65 tr ($ 2.24 bn), or a decline of 18%.
Spending on energy, security and defense as well as social services remains a priority ahead of other sectors. Notably, the state’s planned spending on capital projects will grow by 32% and liberated provinces are included again in planned financial allocations after years of war, an important progression on 2018.
However, Iraq’s greatest challenge of reducing its operational expenditure is still unresolved as it expands by 21% in 2019 and dominates 75% of total expenditure. This will of course leave the country extremely vulnerable to another fall in oil prices.