The Iraqi parliament has approved the country’s budget for 2010 which projects a 23 per cent increase in spending to ID84.7 trillion ($72.4bn) and a deficit of ID22.9 trillion.

Total government revenues are estimated to reach ID61.7 trillion for 2010.

Operational expenses will make up ID60.9 trillion of total expenditure, according to a statement by the Finance Ministry on 26 January. The remaining ID23.8 trillion will be spent on new investment projects.  

The deficit amounts to 27 per cent of total spending, compared with 34.4 per cent in 2009. It will be financed using surpluses from previous years, as well as domestic and external borrowing.

The budget law passed by parliament includes authorisation for Iraq to seek a $4.5bn financing arrangement with the International Monetary Fund and a $2bn loan from the World Bank.

The budget is based on an average oil price of $62.50 a barrel and predicts average oil exports of 2.15 million barrels a day. The 2009 budget was based on an oil price of $50 per barrel and expected exports of 2 million b/d.

Iraq derives more than 95 per cent of its revenues from oil. Crude traded at about $72 a barrel on international markets this week. 

The government is hoping that a spate of new oil deals will boost production and export levels. Iraq is the holder of the world’s third largest proven crude reserves but decades of war, sanctions and under-investment have prevented it from transforming the struggling sector.