Iraqi Parliament Approves Record-breaking Budget in Country’s History

By Staff, Agencies

Iraq's parliament endorsed in the early hours of Monday the largest budget in the country's history, following four days of voting on individual articles.

The approved budget amounts to 198.91 trillion Iraqi dinars [$153 billion] and carries a deficit of 64.36 trillion dinars. Supporters of the budget argue that it will enhance Iraq's social safety net, including state food rations, while allocating significant funds for crucial infrastructure.

Officials from the Ministry of Electricity, for instance, stated last month that it would mark a "quantum leap" for the beleaguered sector, which frequently experiences power outages.

Operational expenditure is set at 133.22 trillion dinars [approximately $102.5 billion], while investment expenditure will amount to 49.35 trillion dinars [$37.9 billion]. The remaining funds will primarily be directed towards debt servicing.

The budget is based on an assumed average oil price of $70 per barrel over three years, with an average daily crude oil output of 3.5 million barrels, including 400,000 barrels from the Kurdistan region.

Prime Minister Mohammed Shayyaa Al-Sudani's government plans to replicate this budget in the following year and in 2025, although parliament retains the authority to vote on amendments. Iraq's fiscal year typically commences on January 1st.

As OPEC's second-largest oil producer, oil revenues make up nearly 95% of Iraq's federal budget. As of early last month, the country's foreign reserves reached $111 billion, the highest since the 2003 US-led invasion that toppled Saddam Hussein, as reported by the Central Bank of Iraq.

The Central Bank also confirmed that Iraq has increased its gold reserves to 132.74 tonnes, maintaining its rank as the 30th largest gold-holding nation worldwide.

For the first time, the budget strengthens the federal government's control over the Kurdistan region's oil industry, which has been a contentious issue since the US-led invasion that ousted Saddam Hussein.

The Kurdistan Regional Government [KRG] had argued that Iraq's 2005 constitution granted it the right to sign agreements with oil companies and states without consulting Baghdad.

However, Baghdad maintained that the region had no authority to make such deals and insisted that oil exports should pass through state-run pipelines and be marketed by the federal government's State Organization for Marketing of Oil.

In February last year, Iraq's Federal Supreme Court deemed the Kurdish region's law governing its oil and gas industry as unconstitutional. The court ordered the region to hand over all its industry activities to Baghdad.

In March, Baghdad won an arbitration case against Turkey for allowing the Kurdistan region to export oil without Baghdad's consent.