Iraq’s cabinet has proposed a draft budget for 2012 with a substantial increase to public spending planned at $111bn.

Expenditure is set at ID131 trillion ($111bn), while income is projected at $91.27bn, leaving a deficit of $19.75bn, about 18 per cent, according to government spokesman Ali al-Dabbagh, AFP news agency reports.

The shortfall will be covered by any surplus income from 2011, as well as increases in oil prices and production and unspecified internal and external debt, said Al-Dabbagh.

From the $111bn, about 15 per cent, which amounts to $16.95bn, has been allocated “to promote security and stability, and capacity-building of military and security”, as Iraq prepares to face its first year without the support of US troops.

Another $12.71bn has been allocated for welfare support while the education sector will receive $8.9bn. Another $4.24bn has been earmarked for industry and energy. This is in addition to the $1.3bn to be used to pay $1 a barrel for each barrel of oil produced by each province.

Iraq’s five-year National Development Plan, outlined at the end of 2010, set agriculture as a priority for Baghdad and the Agriculture Ministry has earmarked an estimated $18bn for 48 projects throughout the country. However, the 2012 budget sets aside only $475m for agriculture, a sector that accounts for more than a fifth of all Iraqi jobs.

No details have been released on Iraq’s average crude oil price assumption for the year, nor projected production levels, which form the vast majority of the government’s income.

The 2011 budget of $82.6bn passed in February, was based on average oil prices of $76.5 a barrel and projected exports of 2.2 million barrels a day (b/d). In July, Iraq’s total revenue from oil exports stood at $48.6bn and Iraq is well on its way to reaching its target of more than $80bn in oil receipts for the year, should oil prices remain high. This would represent an increase of 53 per cent on 2010 revenues, which totalled only $52.2bn (MEED 22:2:11).