Iraqi parliament approves large oil-dependent budget

Nearly 90% of the $111.8 billion budget comes from oil revenues. It is one of the largest ever.
Thursday 24/01/2019
A view of Iraq's parliament, in Baghdad, Iraq. (Reuters)
A view of Iraq's parliament, in Baghdad, Iraq. (Reuters)

BAGHDAD - Iraqi lawmakers on Thursday approved the government's 2019 budget, which at $111.8 billion is one of the largest ever for the oil-rich country.

It represents a nearly 45% increase from last year and awards even more money for public salaries, including those of the northern Kurdish region.

Nearly 90% of the budget comes from oil revenues.

Iraq expects to export 3.9 million barrels per day in 2019, including 250,000 bpd from the Kurdish region, at an average of $56 per barrel.

The current price of crude sits at $63 per barrel.

The deficit is expected to more than double to $23.1 billion, while investments increase to $27.8 billion.

The draft bill was originally submitted to parliament in October, but has been fiercely debated since then.

MPs from provinces ravaged by the fight against the Islamic State group criticised it for not allocating enough reconstruction funds to their regions.

Another debate raged over the share that would be allotted to the administratively autonomous Kurdish region.

MPs had originally scheduled a session for 1:00 pm on Wednesday, but delayed it to 7:00 pm and voted article by article, finishing just after midnight.

The final budget must now be signed by President Barham Saleh before being published in the government's gazette.

The government proposed $52 billion in salaries, pensions, and social security for state workers -- a 15% jump from 2018 and more than half the total budget.

Iraq suffers from rampant unemployment, particularly among youth. The lack of jobs and dismal state of public services including water and electricity sparked widespread protests last summer.

The government's answer to those demonstrations, said analyst Ali al-Mawlawi, appeared to lie in the 2019 budget's allocation for salaries and hundreds of millions of dollars in loans expected for service projects.

"What this government is doing is basically trying to allay some of the demands from the public by increasing the size of the public sector," said Mawlawi, head of research at the Baghdad-based Bayan Center.

"In the short term, it may reduce some of the pressure on the government but in the long-term, the government is committing to a bigger public sector."

Notably, parliament passed a budget measure to fund salaries for the Kurdistan region's state workers and armed forces, the peshmerga.

The budget also stipulates the Kurdish Regional Government must export 250,000 bpd of crude through state-owned companies and deposit the revenues in federal coffers.

If it failed to do so Baghdad would continue to pay salaries, but would not disburse other funds to the Kurdish region, MP Sarkawt Shamsaddin told AFP.

"The good thing is public servants' salaries and peshmerga are not subject to political disputes," said Shamsaddin, representing the northeastern Kurdish city of Sulaymaniyah.

Relations between Baghdad and Arbil, the capital of the Kurdish region, soured in 2017 after Kurdish authorities held an independence referendum.

Last year's budget was approved by parliament in March.

Parliament had also scheduled a vote on two of the five remaining empty cabinet posts in Prime Minister Adel Abdel Mahdi's government, but adjourned without holding it.

(With AFP)