Possible Delay in Baghdad's Budget Approval Will Affect Projects in Kurdistan

Bazari Nishtiman, the possibly greatest market in Kurdistan, which is still partly under construction.

ERBIL, Iraqi Kurdistan—Although Iraq’s budget for the 2011 fiscal year is estimated at nearly $86 billion, the anticipated delay in approving it by parliament is expected to negatively affect reconstruction projects across the country including the autonomous Kurdistan Region in the north.  

Around $10 billion of the estimated budget is expected to go to the coffers of the Kurdistan Regional Government (KRG).  

The figures, however, are not fixed as they have not been approved by the Iraqi parliament yet. Iraq’s parliament has only convened once since March parliamentary elections.

The country has been in a state of political crisis since the elections as no bloc gained the majority of votes needed to form a government.

Aras Hussein, the head of Kurdistan parliament’s financial commission said the ministries of the KRG have finished their budget assessments for the next year and after approval by the KRG the budget draft will be sent to the regional parliament.

But he said that he was not certain if the KRG could approve its budget before the Iraqi government decided on its budget.

Fazil Nabi, Iraq’s deputy finance minister told Rudaw that the ministry of finance and the economic committee of the prime minister’s office will meet next week to discuss the country’s budget for 2011.

But it is not clear if the parliament will convene any time soon to discuss the budget. 

The KRG is supposed to send the budget draft to the parliament by the end of this month. But as the stalemate in Baghdad continues, it is highly unlikely that the government will be able to do so on time.  

Many Iraqi observers and politicians believe the new government in Baghdad will not be formed this year. That can pose serious challenges to KRG’s plans for next year as Kurdistan heavily relies on the budget it receives from Baghdad.  

Although many have said the current care-taker government does not have the authority to determine the country’s budget, Nabi said, “The government can discuss and approve the budget because the groups that form the outgoing government are the same ones that will make up the next government.”

He said it will become clear after two weeks if the Iraqi lawmakers will meet and whether the budget can be discussed.

But Ismael Shukur, a former member of the Iraqi parliament’s financial and economic commission expressed pessimism about the possibility of the budget to be ratified by the parliament any time soon.  

He said that in the previous years even when the country was not in a crisis like now, it would usually take months for the parliament to approve the budget.

Shukur added that “because the various commissions in the parliament are not formed yet, it is highly implausible for the new parliament to be able to convene over the country’s budget under the current circumstances.”

He said until the new government is formed, there is no prospect of ratifying the country’s budget which will negatively reflect on the implementation of reconstruction projects across the country.

Iraqi and Kurdish officials disagree over whether the Kurdistan parliament can pass its own budget before Iraq’s overall budget is approved by the national parliament in Baghdad.

Shukur said, the delay in approving the country’s budget will delay investment in the country and will lead to a rise in unemployment. He said if the budget will be delayed for six months then the various government institutions have to return the budget for that period to the government’s treasury.