Huge deficit in the Iraqi budget bill currently before the parliament

Reports 03:31 PM - 2023-03-19

Budget bill sketch.

Iraq requires 134 trillion, 552 billion, and 919 million dinars for the 2023 budget, which has been submitted to the Iraqi parliament for discussion and approval and the primary source of revenue is the sale of 3.5 million barrels of oil per day, with the Kurdistan Region's share set at 400,000 barrels per day.

The PUK faction in the Iraqi Parliament defends articles relating to the Kurdistan Region's rights and financial entitlements, such as salaries, the budget, and the people's livelihood.

Iraq's budget deficit is approximately 65 trillion dinars

According to a copy of the budget bill in PUKMEDIA’s possession, the total budget is estimated to be 134,552,919,063 dinars, whereas the budget for this year must be greater than 199 trillion, 22 billion, and 111 million dinars, resulting in a deficit of 64 trillion, 469 billion, and 192 million dinars.
The exchange rate for 100 U.S. dollars against the Iraqi dinar is set at 130,000 dinars in the current budget bill
Iraq's primary source of income is oil, and according to the budget bill, Iraq needs to export 3.5 million barrels of oil per day, including 400,000 barrels from the Kurdistan Region.

The Iraqi budget bill consists of 67 articles, in which the price of oil is estimated to be $70 per barrel, and one dollar equals 1,300 Iraqi dinars, so $100 is equivalent to 130,000 dinars.

The bill, which is currently in the Iraqi parliament and scheduled for debate, is expected to spark heated debate among parliamentary factions, particularly the Kurdish parties.

Dr. Bryar Rashid, a member of the Economy, Industry, and Commerce Committee of the Iraqi Parliament, told PUKMEDIA: "The PUK faction has always tried to defend the provisions related to the Kurdistan Region, especially in the 2023 budget, which is the largest Iraqi budget bill, particularly those related to the rights and salaries of Kurdistan Region employees."

"It is crucial that all factions come together on the issue of salaries, as the PUK has always advocated for this," he said.

How to calculate the Kurdistan Region's budget allocation

The provisions of the Kurdistan Region budget allocation are as per Articles 12, 13, and 14 of the 67 budget bill articles on the Kurdistan Region. These provisions include the mechanism of financial and oil transaction records, its financial dues, and its budget share.

Article 12 of the bill stipulates that the Ministry of Finance of the Iraqi government, with the approval of the Prime Minister, will pay the Kurdistan Region's share of total actual expenditures.

According to the article on sovereign expenditures, a portion of the investment and operational allocations of the federal ground forces of the Iraqi army are allocated to the Peshmerga forces based on the population ratios of the above-said forces, thereby classifying them as part of the Iraqi security system. 
Financial obligations between the federal government and the KRG will be zeroed out
The bill's Article 13 defines the mechanisms for resolving the outstanding financial issues between the Kurdistan Region and Baghdad. The first paragraph of the budget bill states that, following an audit by the Financial Monitoring Bureau of the Kurdistan Region and Baghdad, all financial obligations between the federal government and the Kurdistan Region from 2004 to 2022 will be zeroed out.

The second paragraph stipulates that the Kurdistan Regional Government must export 400,000 barrels of oil per month and commit to transferring non-oil revenues to the Baghdad treasury.

The Kurdistan Region's oil sales revenues are deposited in a single bank account

Article 14 states that all revenues from oil sales must be deposited into a single federally supervised bank account, and all other accounts must be closed.

Article 14, paragraph 7, stipulates that, in the event of a dispute between the two governments regarding any provision of the bill, a joint committee shall be established to resolve the dispute.

Additionally, the bill stipulates that the Iraqi government will continue to borrow from the Japanese JICA agency, including $46 million for water and sewerage projects in the Kurdistan Region.
 


PUKMEDIA