Budget failure creates more economic woes for Iraq
Iraq failed to agree on a budget for 2014 and seems set to fail on agreeing to a 2015 budget; economists warned that this would only add to the nation's financial problems.
BAGHDAD — With persistent hurdles delaying the approval of the 2014 budget, new ones are standing in the way of the 2015 budget, including the drop in oil prices on global markets and the deduction of the north oil revenues from Iraq’s crude oil production due to military operations following the Islamic State’s (IS) control of large areas of northern and western Iraq since June 10. Moreover, the Kirkuk field’s oil production, which is estimated at 400,000 barrels per day (bpd), was excluded from the total Iraqi exports after peshmerga forces took control of the field. This resulted in disputes between the central government and the Kurdistan Regional Government (KRG) over the oil exports of Kirkuk and other oil fields in the Kurdistan region. Add to this the rise in military spending.
According to the Iraqyoon News Agency, with the end of 2014 just around the corner and with the late budget approval and the former government’s spending of all oil revenues of the first seven months, the budget amendment and approval is becoming a hard task.
In this framework, economist Bassem Antoine told Al-Monitor that the delay in the 2014 budget approval was affecting Iraq’s economic growth. He asserted that the Iraqi government has to realize the great danger surrounding the Iraqi economy, as the delay in approving the budget has led to economic recession, especially in the fields of investment and operation. Moreover, the private sector, which includes more than 4 million employees, has been crippled. Antoine stressed the importance of limiting the 2014 budget to essential spending and postponing the remaining commitments until the year after.
Member of parliament Hareth Shanshal al-Harithi, a member of the budget approval committee, told Al-Monitor that the parliamentary committee and the Ministry of Finance have not reached any results. The ministry is in a state of confusion because it does not have the power to initiate the state budget. Meanwhile, the other ministries requested from the latter advances to cover their operating expenses, such as employees’ salaries. The Ministry of Finance will then settle the advances from the budget allocations of the ministries when the state budget is approved.
