Iraqi Cabinet Revises Budget To Reflect Falling Oil Revenues

by Lorys Charalambous, Tax-News.com, Cyprus

14 November 2008

The Iraqi cabinet approved a revised version of Iraq’s 2009 budget after USD13bn of expenditure was axed from the previous draft to take into account falling oil prices, and the resulting decline in revenues.

The revised budget of USD67bn is now based on a projected oil price of USD62 per barrel, down from USD80 per barrel.

Government spokesman, Ali al-Dabbagh announced that the USD67bn budget would now be sent to parliament for ratification.

The Iraq government plans to invest much of the USD14.5bn accumulated during the oil boom into much-needed infrastructure improvements after years of war and sanctions. Finance Minister Baqer Jabr Solagh believes that it could take as much as USD400bn to fully rebuild Iraq - inefficiency, corruption and 40% unemployment still burden the economy.

The World Bank has said Iraq’s economy grew over the last few years from USD45bn in 2005 to USD54bn in 2007 but expressed concerns that Iraq depends solely on unsustainable revenues generated from oil sales to balance its budgets.

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