The two sides of the 2015 bud­get

The Kurdish Globe - - NEWS - By Swara Kadir

How is the new 2015 bud­get go­ing to shape the Iraqi and Kur­dish econ­omy? What are its pros and cons?

The price of crude oil is hav­ing a di­rect neg­a­tive ef­fect on the Iraqi bud­get which is es­ti­mated at around 150 tril­lion Iraqi Di­nars. Dur­ing the bud­get de­lib­er­a­tions, the es­ti­mated price per bar­rel of oil was re­duced from $70 to $55 dol­lars to re­flect the lat­est oil mar­ket trend and make the bud­get more re­al­is­tic. This in turn has re­vealed a big bud­get deficit of more than 40 tril­lion Iraqi Di- nars. As a re­sult, the 2015 bud­get is an aus­ter­ity bud­get that has cut down on most ex­tra ex­penses. The grim re­al­ity of war against I.S.I.S is shown by the big­gest por­tions of the bud­get that are taken by the min­istries of De­fense, In­te­rior and En­ergy. The av­er­age Iraqi cit­i­zen will not have an im­proved living stan­dard as a re­sult of the 2015 bud­get. Is that the case for all Iraqi cit­i­zens?

On the up­side, the Kur­dis­tan Re­gion seems to be the pri­mary ben­e­fi­ciary from the 2015 bud­get. For the first time it’s go­ing to re­ceive its full share of the con­sti­tu­tional 17% of the to­tal na­tional bud­get. In ad­di­tion, the Pesh­marga wages and cer­tain other mil­i­tary ex­penses will be paid for di­rectly by the Iraqi gov­ern­ment. Pre­vi­ously it was paid from the Kur­dis­tan Re­gion’s own bud­get. This is no fa­vor done for the Kurds. Why? Firstly, be­cause the Kur­dis­tan bud­get share is not paid to the Kurds for more than half a year. Se­condly, with­out Pesh­marga help the cam­paign against I.S.I.S would fail. Lastly, the Iraqi gov­ern­ment is in dire need of the gov­er­norate of Kirkuk, which is un­der Kur­dish con­trol, to boost its crude oil pro­duc­tion to re­duce the 2015 bud­get deficit.

On the down­side, the big fall in crude oil price seems to her­ald noth­ing but eco­nomic doom and gloom in the 2015 bud­get. How­ever, upon closer in­spec­tion, the Kur­dis­tan Re­gion is quite prob­a­bly go­ing from eco­nomic bust to boom.

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