Iraq to seek $5 billion loan to offset deficit as parliament expects 2017 budget

BAGHDAD-- The Iraqi government is planning to apply for $5 billion in international loan next year to balance the upcoming budget that is predicted to have an estimated 11 percent deficit largely due to the continued low prices of crude oil in global markets, a lawmaker told Rudaw Tuesday.

 

Masoud Haidar who is a member of the parliament's financial committee said they were expecting to receive the 2017 budget in early October as the assembly prepares to vote on the government's proposed spending plan.

 

Iraq’s budget in 2015 shrank to $105 Billion from $118 in 2013 as global prices of crude oil dropped to a record law. The country had no drafted budget in 2014 due to lingering disputes with the Kurdistan Regional Government (KRG) and the start of a costly war with the Islamic State (ISIS).

 

The 2015 budget was based on $56 for a barrel of crude oil, but since the price hovered far bellow that price Baghdad used its international reserve cash to offset the widening deficit.

 

The deficit continued to hit the annual budget in 2016 as oil prices landed below $40, shrinking the budget to $88 billion with a $15 billion deficit. 

 

Oil sales are Iraq’s main source of revenue, constituting up to $90 percent of the country's incomes. 

 

"We have estimated that the oil prices will be around $42 next year which means that the state is likely to have $56 billion in 2017 from oil sale," Haidar told Rudaw.

 

Haidar said Iraq was expected to export 3,750,000 barrels of oil (bpd) during 2017 without the KRG's separate export which he predicted to be over 550,000 bpd.

 

The lawmaker said the KRG would not receive its share of national budget if Erbil continues to export its oil independent of Baghdad.

 

Iraq's government has frozen Kurdish annual budget of nearly $12 billion since 2014 after disagreements between Erbil and Baghdad deepened over KRG's oil deals with foreign firms.

 

Iraq's 2017 proposed budget is nearly 80 trillion dinars (around $66 billion) while the expected sate expenses are estimated to be around 90 trillion dinars (around $75 billion).