Iraq bases 2017 budget on higher oil exports, $42 price

Finmin’s exit could delay IMF loan

BAGHDAD, Sept 28, (RTRS): Iraq’s government issued a 2017 budget forecast on Tuesday which it said assumed the country will be exporting more crude and at a higher price than in recent months.

The OPEC nation expects to sell 3.75 million barrels per day of crude at a price of $42 a barrel, the government said in a statement.

The 2017 budget forecast a drop in expenditures to 90.224 trillion Iraqi dinars ($77.51 billion).

The 2016 budget envisioned expenditures of 106.9 trillion dinars with a 23.5 trillion shortfall, reflecting the sharp drop in oil prices and revenues since 2014.

The government’s crude oil exports ran at a rate of 3.23 million barrels per day in August, selling at average price of $39.25 per barrel, according to the oil ministry.

Meanwhile, last week’s dismissal of Iraqi Finance Minister Hoshiyar Zebari, the latest convulsion in Baghdad’s increasingly unstable politics, risks delaying billions of dollars in badly needed budget support from international lenders and investors.

Parliament dismissed Zebari, a prominent Kurdish official who served previously as foreign minister for more than a decade, after questioning him over alleged corruption and mishandling of public funds.

Zebari denied the charges as “vengeful, politicised and shortsighted”, accusing former prime minister Nuri al-Maliki of orchestrating his ouster in a bid to topple the government of Prime Minister Haider al-Abadi.

The political infighting comes as major OPEC producer Iraq struggles to fill a public deficit left by the collapse in global prices for its crude exports.

It is yet another senior vacancy for Abadi’s government, which also has no defence minister or interior minister, even as it is preparing for its biggest battle yet to recover territory captured by Islamic State, with a US-backed assault on the jihadist bastion of Mosul expected in coming months.

To replace missing oil revenue, Iraq has turned to the International Monetary Fund for a loan package, which would also serve as the basis for other lenders to provide support.

The IMF approved a three-year, $5.34 billion standby loan in July, in exchange for a package of economic reforms. Baghdad hopes that will unlock more than $12 billion in additional aid from sources such as the World Bank and the Group of Seven leading industrialised nations.

But without Zebari, an avuncular fluent English speaker well respected in international capitals, the Baghdad government loses the figure most closely associated with the deal. Christian Josz, head of the IMF’s Iraq mission, called Zebari “a champion” of the standby agreement.

“He was a big driver behind the reform, and now we don’t know who is going to take over from him,” Josz told Reuters in a phone interview.

He said negotiations would continue with Zebari’s eventual replacement, once named: “The IMF has programmes with countries, not individuals.”

An initial tranche of $640 million was dispersed in July, but the next tranche of equal value depends on a first review. That could happen as early as mid-November but may be delayed while Iraq gets its house in order.