Thursday, September 23, 2010

Why The Iraqi Budget Is Not Accurate

The Government Accountability Office (GAO) recently did a study of Iraq's spending and came to the conclusion that its budget numbers are not reliable. The major reason is because every year the government spends several billion outside the official budget. From 2005 to September 2009 Iraq made $40.3 billion in advances. That meant while Baghdad reported a $52.1 billion surplus from 2005-2009, it actually ran a deficit the last two years after accounting for the advances. In 2009 for example, Iraq had a $2.2 billion surplus from its $46.8 billion budget, but ended up with a $7.1 billion deficit after advances. Even then, the Board of Supreme Audit, Iraq's main financial watchdog, warned that the government couldn't accurately account for those extra expenditures. In a study of the 2005 budget for example, the Board found that not all the advances were settled at the end of the year, but they were counted as spent anyway, the government didn't follow its own rules in executing the spending, and warned of misappropriations. That's another reason why the official budget numbers are meaningless. Not only are there large amounts of extra spending, those expenditures are not accurately recorded either. The government is supposed to be working on these problems, but it'll probably take years to fix if ever.

Estimated Budget Surplus

$27.0 bil$32.7 bil$43.6 bil$67.2 bil$46.8 bil$217.3 bil
$20.6 bil$25.0 bil$31.2 bil$65.1 bil$44.5 bil$177.4 bil
Surplus$6.4 bil$7.7 bil$12.4 bil$11.1 bil$2.2 bil$52.1 bil

Estimated Accumulated Advances
2004$6.4 billion
2005$10.0 billion
2006$11.9 billion
2007$16.7 billion
2008:$30.4 billion
To Sep. 2009$40.3 billion

Predicted Iraq Deficits, Actual Surplus, Adjusted Surplus/Deficit
Source: Government Accountability Office
Iraq's Estimated Adjusted Surplus
Estimated Budget Surplus$52.1 billion
Estimated Accumulated Advances$40.3 billion
Estimated Adjusted Surplus$11.8 billion


United States Government Accountability Office, "Iraqi-U.S. Cost-Sharing Iraq Has a Cumulative Budget Surplus, Offering the Potential for Further Cost-Sharing," September 2010

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