Iraq’s Presidential Council approved the 2010 budget on February 11, 2010. It is for $71.29 billion, the second largest amount since Iraq regained its sovereignty in 2005. A breakdown of spending shows that operational spending, which goes towards salaries, pensions, and the food ration system, is again almost ¾ of the budget, and that electricity appears to be the priority of the government in the new year.
Iraq has a large and inefficient state-run economy with a bloated bureaucracy. It should be no surprise then that the majority of the country’s budgets since 2005 have gone towards operational costs. In 2010, $51.59 billion, 72.3% of the total, is for the operations budget. Back in 2005, the operations budget was only for $16.1 billion. One major reason for the dramatic increase is that the number of people working for the government has doubled since then, making it the largest employer in the country. Many extra workers have been hired as part of patronage systems and to keep people out of the insurgency. The food ration system, which is the largest in the world, has also increased in cost over the last two years because of declining agricultural output and the on-going drought has led to increased imports. Iraq spent $7.3 billion on the program in 2008. The government has traditionally spent a large percentage of its operational budget.
The capital budget in 2010, which is for investment, is for $19.7 billion. That’s an increase from the previous year when it was $12.73 billion. The Electricity Ministry is getting the largest increase with $3.49 billion in 2010 compared to $1.08 billion in 2009. It has big plans this year to boost output, and build a series of new power plants. Unspecified “other” spending is also going up from $4.73 billion in 2009 to $7.89 billion this year. The Kurdistan Regional Government (KRG) is also getting an increase from $1.95 billion to $2.72 billion. Kurdistan gets a set 17% of the budget however, so the growth in their capital budget is due to the larger budget overall. The other parts of the government are not gaining as much. The Defense, Interior, and Justice Ministries, which deal with security are only getting modest improvements in their budgets. Defense is getting $380 million compared to $270 million last year. The Interior Ministry is going from $220 million to $260 million, and the Justice Ministry is getting $140 million this year compared to $110 million. Iraq’s eighteen provinces are also getting only $10 million more in 2010. The Iraqi government has never been good at spending its investment budget however, so only around 50-60% of this money may get spent.
The 2010 budget shows where Baghdad’s priorities are for the new year. First, they want to dramatically increase spending after the 2009 budget had to be cut due to the world recession. Second, electricity and discretionary spending are the focus of investment this year. Last, the bloated government is still eating up the majority of the budget. Baghdad needs to vastly improve its ability to spend its capital budget, and could cut thousands of unneeded workers off the payroll. Both are unlikely to happen however as Iraq’s bureaucracy lacks trained staff and people are use to going to the government for employment.
2005: $24.4 bil
2006: $34.0 bil
2007: $41.1 bil
2008: $72.2 bil
2009: $58.6 bil
2010: $71.3 bil
2010 Revenue Projections And Budget
Oil Revenue: $47.91 bil
Other Revenue: $4.86 bil
Total: $52.77 bil
2010 Budget: $71.3 bil
Projected Deficit: $18.53 bil
Breakdown Of 2010 Budget
Total: $71.3 bil
Operational Budget: $51.59 bil (72%)
Capital Budget: $19.7 bil (28%)
Other: $15.82 bil
Finance: $10.55 bil
Kurdistan Regional Government: $6.03 bil
Interior: $5.89 bil
Defense: $4.52 bil
Education: $4.31 bil
Trade: $4.03 bil
Justice: $450 mil
Other: $7.89 bil
Electricity: $3.49 bil
Kurdistan Regional Government: $2.72 bil
Oil: $2.65 bil
Provinces: $2.18 bil
Defense: $380 mil
Interior: $260 mil
Justice: $130 mil
Abbas, Mohammed, “Iraq investors face bloated workforce dilemma,” Reuters, 8/10/09
Aswat al-Iraq, “Presidential Board approves 2010 budget,” 2/11/10
Department of Defense, “Measuring Stability and Security in Iraq,” 2/15/10
Inter-Agency Information and Analysis Unit, “Iraq Labour Force Analysis 2003-2008,” United Nations Office for the Coordination of Humanitarian Affairs, January 2009
IRIN, “IRAQ: Government moves to rationalize food aid system,” 6/17/09
Special Inspector General for Iraq Reconstruction, “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/10
United States Government Accountability Office, “Iraqi Revenues, Expenditures, and Surplus,” August 2008
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