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Iraq approves $100 billion budget

Baghdad, February 24, 2012

Iraq's parliament approved on Thursday a much delayed $100 billion budget for 2012, based on an average oil price of $85 per barrel and 2.6 million barrels per day (bpd) in crude exports.

The long overdue budget approval was held up by frequent disagreements between the country's lawmakers. Under a delicate power-sharing agreement, Iraq's ministries have been divided between Shi'ite, Sunni and Kurdish political blocs.

The most recent dispute flared up in December, when moves by Shi'ite Prime Minister Nuri Al-Maliki against two Sunni officials prompted a walkout by lawmakers from the Sunni-backed Iraqiya bloc which lasted until late January.

The budget passed late on Thursday included a projected deficit of $12.6 billion, the bulk of which will be covered by a surplus in the Development Fund of Iraq (DFI) account at the New York Federal Reserve.

The DFI was established after the 2003 US-led invasion of Iraq in order to direct oil revenues to reconstruction and food programmes for Iraqis. Iraq holds the bulk of proceeds from its oil export sales in the DFI.

The budget, which covers operational and investment spending, allocated $31.7 billion for investment projects. The rest would go to covering salaries and food ration items.

The budget also allocated 17 trillion dinars ($14.6 billion) to the country's security forces, since bringing violence under control remains a top concern in Iraq after U.S. troops ended their nearly nine-year presence in mid-December.

Earlier on Thursday, a string of attacks across the country killed at least 60 people, highlighting the fact that the security situation in Iraq remains precarious.

The budget was based on annual crude oil exports of 2.6 million bpd, including 175,000 bpd from the autonomous Kurdistan region. Last year, oil exports averaged 2.165 million bpd, and they slipped to 2.106 million bpd in January.

In London, Brent crude for April delivery settled at $123.62 a barrel, up 72 cents.

The Opec member, which is trying to rebuild its battered economy after years of war and sanctions, depends mainly on oil revenues, which fund about 95 percent of its budget.

Iraq, which has the fourth-biggest oil reserves in the world, aims to boost its oil production capacity to 8-8.5 million bpd by 2017, which could vault it into the top echelon of world producers.

Iraq's 2011 budget was $82.6 billion, based on an oil price of $76.50 per barrel and 2.2 million bpd in crude exports.   -Reuters




Tags: Budget | Iraq | oil price | crude exports |

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