Sunday, February 7, 2010

Some Of Iraq’s Provinces Still Unhappy With New 2010 Budget

At the end of January 2010 Iraq’s parliament passed a new budget. After the details were made public, two provinces complained about their allocations as several others did before the budget was passed. On February 6, the governors of Maysan and Qadisiyah both claimed that their provincial budgets did not meet their needs, and would result in large deficits. Before the budget was passed, five provinces and a southern conference made similar complains, and asked the central government to make more money available to cover local development projects.

The source of the problem for the provinces was the 2008 budget. That was the largest amount of money spent by the government since the U.S. invasion. It set aside $6.4 billion for the governorates, compared to just $2.1 billion in 2007. The provinces went on a spending spree signing several large contracts to expand services. When oil prices collapsed due to the world recession, Iraq was forced to drastically cut its spending since petroleum accounts for the vast majority of the country’s revenue. In 2009 the provinces only got $2.17 billion for investment, a $4.23 billion cut from the previous year. The 2010 budget only allots $2.18 billion for the governorates’ capital spending even though it’s just around the same amount as the 2008 budget.

In the end, the provinces will have to cut their spending to meet their new financial situation. The governorates were never known for using most of their money in the first place, but they are probably under added pressure to do so this year because the elections are just a few weeks away and they haven’t produced much since they took power in 2009. If they want more local development projects, they will have to rely upon the ministries in Baghdad, but they too have a bad record of expending their capital budgets on investment.That makes the real loser not the local governments who are running deficits, but the Iraqi public who have long complained about a lack of jobs and services.

SOURCES

Aswat al-Iraq, “Diwaniya demands more allocations, 2/6/10
- “ID70b deficit in 2010 budget for Missan – governor,” 2/6/10

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

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