Iraq is expecting its budget deficit to be less than $20bn in 2016, as government spending comes in lower than initially planned.

In December 2015, parliament approved a budget of $96bn, with a $20bn budget deficit, based on projected oil exports of 3.6 million barrels a day (b/d) at a price of $45 a barrel.

“So far in 2016, revenues have been less than expected, but so has spending,” Majida al-Tamimi, a member of Iraq’s Parliamentary Finance Committee, tells MEED. “If Iraq did spend $95bn over 2016 then the deficit would be between $20bn and $30bn, but because we are unlikely to spend the $95bn, the deficit is probably going to be lower than the planned $20bn.”

Spending on projects will focus mainly on ongoing schemes, according to Al-Tamimi.

“Most projects that haven’t started have already been put on hold,” she says.

Some key projects in the pre-execution phase will still go ahead, according to Al-Tamimi.

“The government is focused on oil-export-related projects because of the revenues they will create,” says Al-Tamimi. “Due to the current financial crisis, Iraq is obviously looking to diversify and create other revenue streams.”

The country’s foreign reserves stand at about $60bn, according to Al-Tamimi. This is down from $68bn in July, according to the Washington-based IMF.

Due to financial pressure, Baghdad has introduced unprecedented salary cuts for senior civil servants.

In January 2016, Iraq’s Prime Minister Haider al-Abadi said his country was hoping to secure between $6bn and $7bn in loans from the IMF.