Iraq’s parliament has approved a $82.6bn budget for 2011.
The financial plan is based on crude oil exports of 2.2 million barrels a day (b/d) and average oil price of $76.50 a barrel.
The budget, passed on 20 February, has seen a number of revisions after months of political wrangling, news agency Reuters reports. The draft proposal of $79.47bn was submitted in November 2010 before the current government was formed and oil prices were at $73 a barrel.
The budget has also been changed taking into account protests across the country and popular uprisings across the Middle East and North Africa. Much of the anger in Iraq has been directed at the country’s ailing power sector.
In a move to calm the situation, on 15 February, the government diverted $900m from the purchase of F-16 combat jets from the US’ Lockheed Martin to its food rationing programme.
The budget projects a deficit of $13.4bn, but with crude prices currently hovering at $107 a barrel, this could quickly be reduced.
Some $25.7bn has been allocated for capital expenditure, particularly in the power sector.
Iraq’s current power production capacity is just 7,000 MW compared to demand of more than 12,000MW.
The budget is based on oil exports of 2.2 million b/d, including 100,000 b/d from the semi-autonomous northern Kurdish Regional Government (KRG). The draft budget required the Kurdish region to produce 150,000 b/d or be penalised, a condition which has since been removed (MEED 11:2:11)
The Kurdish region produces about 80,000 b/d, with exports via a pipeline from Kirkuk to Ceyhan in Turkey currently at 50,000 b/d. Exports from the region had been halted for more than a year over a dispute between the Oil Ministry in Baghdad and Irbil over the KRG’s production sharing contracts signed with foreign oil companies.