Iraq’s Parliament Approves Record $153 Billion Budget for Economic Development

Iraq’s parliament has ratified a historic budget of 198.9 trillion dinars ($153 billion) for the years 2023 to 2025. This budget, the largest in Iraq’s history, is primarily focused on addressing the public wage bill and funding development projects to enhance services and rebuild infrastructure impacted by years of war and neglect.

It’s indicated that the budget allocation aims to encompass reforms, infrastructure development, and job creation. Deputy Speaker of the Iraqi Council of Representatives, Shakhwan Abdullah Ahmed, emphasized the necessity of securing basic services, rehabilitating infrastructure, creating employment opportunities, reconstructing affected areas, and addressing the needs of displaced people.

A significant portion of the budget is dedicated to generating tens of thousands of public sector jobs. This initiative is particularly crucial for Iraq, a country with one of the world’s fastest-growing populations and an economy heavily reliant on state leadership. High unemployment and the lack of jobs and public services have been ongoing issues, leading to frequent protests.

Despite the optimism surrounding the budget’s approval, concerns about Iraq’s fiscal deficit, which is estimated at a record 64.36 trillion Iraqi dinars ($49 billion), have been raised. This deficit is more than double the figure in the 2021 budget. Ahmed Tabaqchali, a visiting fellow at the London School of Economics Middle East Centre, highlighted the financial implications of adding approximately 600,000 new employees to the public wage and pensions bill.

The budget, which faced delays due to political instability and parliamentary disagreements, is based on an oil price assumption of $70 per barrel and projects oil exports at 3.5 million barrels per day. This includes 400,000 barrels per day from the semi-autonomous Kurdish region.

Analysts express concerns regarding the reliance on oil revenue, given the fluctuations in crude prices and production levels. The International Monetary Fund has cautioned that the increasing public wage bill will contribute to rising deficits and financial pressures unless there is a significant hike in oil prices.

To achieve fiscal equilibrium, Iraq would need an oil price of $96 per barrel, while the price averaged $71.3 in May. The IMF advises a tighter fiscal policy to strengthen resilience and reduce dependence on oil revenues, while still addressing critical social spending needs.

The budget also addresses longstanding issues between the Iraqi government and the Kurdish region. It stipulates that oil revenues from the Kurdish region will be deposited in an account overseen by the Iraqi central bank, a move aimed at resolving disputes over the Kurdish region’s unilateral oil exports and revenue management. Under a recent agreement, Iraq’s state-run marketing company SOMO will now control the marketing and export of oil from fields in the Kurdish region.

Discover supply chain news insights on The Supply Chain Report. Enhance your international trade knowledge at ADAMftd.com with free tools.

#IraqBudget2023to2025 #HistoricBudget #PublicWageBill #DevelopmentProjects #InfrastructureRebuilding #JobCreation #PublicSectorJobs #UnemploymentSolutions #KurdishRegionOil #IraqEconomicReforms #KurdishRegionAgreement #OilRevenueReliance #FiscalDeficitConcerns #IMFRecommendations #OilExports #SOMOControl #DisplacedPeopleSupport #ReconstructionEfforts #EconomicStability #OilPriceAssumption #BudgetApproval #PoliticalInstability #OilExports3.5Million #IraqOilPrices