Iraqi parliament approves 2015 budget worth $105b

January 29, 2015

BAGHDAD: Iraq's parliament approved a budget worth 119 trillion Iraqi dinars ($105 billion) on Thursday, made possible by improved ties between Baghdad and the autonomous Kurdish region but constrained by plunging oil prices.

The budget, revised to trim the forecast for oil to $56 a barrel, down from the $70 originally assumed, foresees a deficit of 25 trillion dinars ($22 billion dollars).

Prime Minister Haider al-Abadi fears lower oil revenues could hurt Iraq's military campaign against Islamic State militants who swept across northern Iraq last summer, prompting U.S.-led air strikes.

The government of former prime minister Nuri al-Maliki failed to pass a 2014 budget after relations between Sunnis and Kurds deteriorated.

By contrast, the 2015 budget is a sign of growing goodwill between Baghdad and the Kurdish region as they both fight Islamic State.

The budget seals a financial arrangement between Baghdad and the Kurdish region that will see the Kurds export 300,000 barrels per day of oil from Kirkuk and 250,000 bpd from their own fields in return for a 17 percent share of the budget.

The government is expected to finance the deficit through Treasury bills, government bonds and borrowing from local banks.

In addition, Iraq plans on drawing funds from the International Monetary Fund through its Special Drawing Right, and will introduce a tax on imported cars and cellular telephone SIM cards and the Internet.