Iraq’s 2023 budget expected to be its largest yet

Government finances have been boosted by high oil prices in the international market

A foreign currency exchange market in Baghdad. The devaluation of Iraq's currency have contributed to an increase in foreign reserves. Reuters

Iraq’s budget for next year is expected to be one of the largest in the country’s history, reaching between $120 billion and $130bn, an MP told The National on Thursday.

High oil prices and spending limits amid political wrangling over the formation of a new government after national elections in October last year have boosted finances.

“Definitely, it will be the largest comparing it with previous years,” said Jamal Kojar, a member of the parliament financial committee.

“In previous years, we had financial crises [caused by low oil prices] and dwindling revenue, as well as the fight [against ISIS] and the political stalemate.

“Now, all that is gone and our monthly revenue is healthy and we have financial abundance.”

In late October, Iraq's Parliament approved a new government led by Prime Minister Mohammed Shia Al Sudani, ending a year-long political crisis that led to clashes between political rivals.

Earlier in November, the Finance Ministry said it had begun preparing the budget and would send to the Cabinet "very soon”.

“It should be sent to the Parliament this month otherwise it will be delayed, and any delay will affect the spending next year,” Mr Kojar said.

The budget calculations are expected to be based on an assumed oil price of between $70 and $80 a barrel, he said.

Brent, the benchmark for two thirds of the world’s oil, was 2.3 per cent lower at $93.04 a barrel at 10.56pm UAE time on Tuesday.

West Texas Intermediate, the gauge used to track US crude, was down 2.9 per cent at $86.27 a barrel.

Oil revenue makes up about 95 per cent of federal revenue in Iraq.

As of early October, the country's foreign reserves stood at $85bn, the highest since the 2003 US-led invasion that toppled Saddam Hussein, the Central Bank of Iraq said.

This month, the Oil Ministry said exports during October averaged 3.382 million barrels a day, generating $9.25bn. The average achieved price for a barrel was $88.31.

Foreign reserves are expected to increase to $90bn by the end of the year, the central bank said, thanks to the rise in oil prices and devaluation of the Iraqi currency in December 2020.

Iraq's monthly oil revenue hit a historic high this year, exceeding $10bn in some months.

The country boosted its gold reserves to 130.4 tonnes last month, it said.

Iraq is Opec's second-largest oil producer after Saudi Arabia.