Kur­dis­tan’s 17% share fixed in Iraq’s 2015 bud­get

*Kur­dis­tan’s share is es­ti­mated to be around IQD 13 tril­lion, out of IQD119 tril­lion * Fore­casts oil at $56, above cur­rent mar­ket price * Seals oil-shar­ing deal with Kur­dish re­gion

The Kurdish Globe - - FRONT PAGE -

Iraq's Par­lia­ment ap­proved a bud­get on Thurs­day worth 119 tril­lion Iraqi di­nars (US$105 bil­lion), made pos­si­ble by im­proved ties be­tween Bagh­dad and the au­ton­o­mous Kur­dish re­gion but con­strained by plung­ing global oil prices.

Iraq's Par­lia­ment ap­proved a bud­get on Thurs­day worth 119 tril­lion Iraqi di­nars (US$105 bil­lion), made pos­si­ble by im­proved ties be­tween Bagh­dad and the au­ton­o­mous Kur­dish re­gion but con­strained by plung­ing global oil prices.

Nechir­van Barzani, Prime Min­is­ter of the Kur­dish Re­gion, praised the 2015 bud­get but pointed out the coun­try re­mains in dire fi­nan­cial straits.

"It is very good, but un­for­tu­nately (Bagh­dad) doesn't have money," he told Reuters.

The State of Law tried hard to pre­vent the bud­get to be passed, but their ef- forts failed. They wanted the Kur­dish Gov­ern­ment to ex­port all pro­duced oil through SOMO, but the Kurds refuse to ac­cept ex­port­ing more than what is fixed in the Er­bil-Bagh­dad agree­ment which is 550,000 bar­rels per day.

The bud­get of Pesh­merga has been also fixed within the bud­get of Iraqi Min­istry of De­fence.

Pas­sage rep­re­sents a victory for Prime Min­is­ter Haider al-Abadi, who fears lower oil rev­enues could hurt Iraq's mil­i­tary cam­paign against Is­lamic State.

The bud­get, re­vised to trim the ex­pected price of oil to $56 a bar­rel, down from the $70 orig­i­nally as­sumed, fore­sees a 25 tril­lion di­nar deficit.

The ad­justed oil fore­cast may have sat­is­fied some MPs who saw pre­vi­ous es­ti­mates as un­re­al­is­tic, but oth­ers re­main crit­i­cal.

"I don't know if they are de­ceiv­ing them­selves or the Iraqi peo­ple by say­ing the price of oil is $56," MP Kad­him al-Saidi told re­porters be­fore vot­ing be­gan.

Brent crude has been trad­ing just be­low $50 this week, down from $115 in June.

The bud­get seals a fi­nan­cial ar­range­ment be­tween Bagh­dad and the Kur­dish Re­gion that will see the Kurds ex­port 300,000 bar­rels per day of oil from Kirkuk and 250,000 bpd from their own fields in re­turn for a 17 per­cent share of the bud­get.

"There is no legal for­mu­la­tion or con­sti­tu­tional cover for this agree­ment. It ap­pears the po­lit­i­cal blocs ... robbed the Iraqi peo­ple," said Saidi.

DIF­FI­CULT TIMES AHEAD

For Abadi, the bud­get is a sign of grow­ing good­will be­tween Bagh­dad and the Kur­dish Re­gion as they both fight the Is­lamic State.

Kur­dish Pesh­merga forces rolled back the rad­i­cal ji­hadists af­ter they surged across the Syr­ian bor­der last sum­mer, threat­en­ing the re­gional cap­i­tal of Er­bil.

But Is­lamic State, hold­ing large swaths of Iraq's north and west, re­mains a threat to the coun­try's se­cu­rity and unity. De­fence alone is ex­pected to take up 20 per­cent of 2015 bud­get ex­pen­di­ture.

In ad­di­tion, the state must en­sure the pay­ment of its civil ser­vants, with more than 5 mil­lion state em­ploy­ees. It is with­hold­ing 15 per­cent of high- level gov­ern­ment salaries, which are meant to be paid back when the coun­try is more fi­nan­cially sta­ble.

The gov­ern­ment is ex­pected to fi­nance the deficit through Trea­sury bills, gov­ern­ment bonds and bor­row­ing from lo­cal banks.

More­over, Iraq plans on drawing funds from the In­ter­na­tional Mon­e­tary Fund through its Spe­cial Drawing Right, and will in­tro­duce a tax on im­ported cars and cel­lu­lar tele­phone SIM cards and the In­ter­net.

Kuwait has agreed to de­fer for one year Iraq's repa­ra­tions for its 1990 in­va­sion of its neigh­bour.

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