The Iraqi parliament yesterday belatedly approved a record US$152 billion budget for this year, after months of wrangling over the sharing of oil revenue between the central government in Baghdad and the semi-autonomous Iraqi Kurdish region in the north.
The process was also hampered by infighting between different Iraqi Kurdish parties.
The budget — approved six months into the fiscal year and after four chaotic late-night voting sessions — allocates 12.6 percent of the revenue to the Kurdish region and is seen as strengthening Baghdad’s hand on the oil revenues.
Photo: Reuters
The central government in Baghdad and the Kurdish regional government in the city of Irbil have been locked in a dispute over oil revenue for years, while competing Kurdish parties are also at loggerheads over their shares.
In the absence of a binding law detailing the sharing of funds from oil and gas exports, the Kurdish region has moved ahead with exports on its own, while Baghdad has maintained that all exports should be run through the state-owned oil marketing company, SOMO, with Irbil receiving a share of the profits.
Under the new budget, the Kurdish region can market its own oil, but must deposit the revenue in a bank account that officials from the central government can monitor. Baghdad would then deduct that amount from its monthly allocation to the Kurdish regional government and transfer any surplus money to Irbil.
The budget vote was dragged out over several days, in part due to objections by the largest Kurdish party, the Kurdistan Democratic Party, to the provisions on the revenue-sharing process and a related dispute resolution mechanism.
The Shiite majority coalition holds the most seats in the 329-seat Iraqi parliament, with 220 seats. The Kurds, who are the second-largest ethnic group in Iraq, have about 60 seats, but they are divided between two main parties: the Kurdistan Democratic Party and the Patriotic Union of Kurdistan, which are often at odds.
The finalization of the budget was a victory for Iraqi Prime Minister Mohammed Shia al-Sudani’s government, which was formed last year following a lengthy political vacuum in the wake of 2021 elections.
The budget projects this year’s revenue at about US$103.3 billion, based on a projected price of US$70 per barrel for oil exports, the main source of income for Iraq, with exports estimated at 3.5 million barrels a day, including 400,000 thousand barrels from the Kurdish region. The budget estimates a deficit of about US$48 billion.
“The new budget is a cause for concern, as it relies heavily on oil revenue,” said Mudhar Mohammed Salih, al-Sudani’s adviser for financial affairs. “If oil prices drop, the deficit will increase, forcing the government to borrow money. This is a risky proposition, as it could lead to debt problems.”
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