The Iraqi government has allocated $200m in new funds to the Basra Municipality to compensate for the local government’s budget deficit this year.

Baghdad has granted the local government of the southern province ID208bn ($181m) as a supplementary budget for the year, and an additional $20m to lay a pipe carrying drinking water from central Basra to Faw in the south of the province.

Local officials say they expect to receive a further $25m for projects to develop the marshland areas in Basra.

Iraq’s national government has suffered from a budget deficit of about $20bn this year following the collapse in oil prices during the second half of 2008.

In November last year, the government set the 2009 budget at $80bn, but slashed its spending to $58bn by the time parliament finally approved the bill in March this year.

Iraq’s Finance Ministry will submit the country’s 2010 budget for parliamentary approval by October this year (MEED 10:8:09).