No 2009 Budget Deficit

The Special Inspector General for Iraq Reconstruction (SIGIR) has released the latest numbers on Iraq’s budget. Although the figures are still estimates, they show that Iraq will not have a large deficit in 2009 as previously reported. Earlier numbers by the SIGIR said that Iraq was running a $16 billion deficit due to low oil prices at the beginning of the year, and oil exports, which provide over 80% of government revenue, not meeting the mark set by the budget. Oil prices rebounded at the end of 2009 however, earning Iraq more than expected, while Baghdad was unable to spend most of its money as usual. By the end of last year, Iraq earned between $43-$45 billion, while spending approximately $37-$46 billion. Those numbers could change, but as of now, the government will either have a surplus or a small deficit. A $3.8 billion loan from the IMF will cover any difference that appears. The Finance Ministry is also in negotiations to borrow $500 million from the World Bank for this year’s expenditures.

The 2010 budget has a projected $18.53 billion deficit. It is for $71.3 billion, with $51.59 billion, 72%, going towards operational costs that are for salaries, pensions, the food ration system, etc., and $19.7 billion, 28%, for capital spending that goes towards investments in infrastructure. The government projects $52.77 billion in revenues, leading to the deficit. While oil exports dropped in 2009, the first time in three years, prices for a barrel of Iraqi crude increased. That, along with the government’s continued spending problems, could mean a smaller than predicted deficit by the end of 2010.

SOURCES

Special Inspector General for Iraq Reconstruction, “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/10