Iraq’s Council of Ministers has approved a 2013 draft budget totalling $118.4bn, an increase of 18 per cent on the 2012 budget.

The budget projects revenues of $102.3bn based on an average oil export price of $90 a barrel and exports of 2.9 million barrels a day (b/d), according to a 31 October report by the US’ Special Inspector General for Iraq Reconstruction (Sigir).

The draft budget still awaits approval from Iraq’s parliament, the Council of Representatives.

The oil price assumption is $5 a barrel higher than in 2012, while the forecast export volume is up by 12 per cent, with an additional 300,000 b/d expected. Baghdad’s oil exports averaged 2.39 million b/d for the year up to September, with oil prices at $106.77 a barrel.

At $71.2bn, the lion’s share of the budget has been set aside for the government’s operational costs, while the remaining $47.2bn covers capital expenditure. The budget also projects a deficit of $16.1bn, which is expected to be covered by unspent 2012 allocations, internal and external borrowing, and additional oil revenues from rises in oil prices.

In August, Iraq’s oil production rose to 3.17 million b/d, its highest level in more than two decades, promoting the country’s status to Opec’s second-largest producer.

The growth in production has come mainly from Iraq’s giant southern fields, which are being developed by international oil companies. Sigir reports that the Halfaya field in southeast Iraq has continued a gradual increase in production since coming online in June 2012. The field’s output is now estimated at more than 86,000 b/d and the developers, a consortium of China’s Petrochina and France’s Total, plan to hit production of 100,000 b/d by the end of the year.