Iraq Drafts Blowout Budget: More Energy Capex, But More Wages Too

24 Mar 2023 Issue: 66 / 12 By: Yesar Al-Maleki

Left without a budget for 2022, Iraq’s government has proposed an unprecedented $152bn whopper for 2023, which it hopes to replicate over the upcoming two years. But uncertainty over oil prices and massive spending requirements may see Baghdad struggling with oversized deficits.

Almost two years have passed since Iraq’s parliament last passed a budget (MEES, 9 April 2021). The political vacuum created by wrangling over government formation in 2022 (MEES, 14 October 2022), coupled with record high oil export revenues, meant that Opec’s second largest producer was left with a large oil windfall that it could not legally spend.

This all stands to change now, with the government of Prime Minister Mohammed al-Sudani on 13 March finally approving its much-anticipated 2023 draft budget (MEES, 6 January), passing it to parliament to vote into law. With total expenditure of ID197.8tr ($152bn) the 2023 budget will be Iraq’s largest ever in an attempt to make up for lost time and kickstart many delayed projects. But with revenues only projected to come in at ID134.6tr ($103bn), Baghdad is slated to have a colossal ID63.3tr ($49bn) deficit to finance (see table). (CONTINUED - 2730 WORDS)