Iraq's parliament on Saturday adopted an $88.5 billion budget for 2018, with Kurdish lawmakers boycotting the vote to protest against a cut in the amount allocated to their autonomous region.

Iraq passes long-delayed post-Daesh budget
Iraq passes long-delayed post-Daesh budget (Reuters)

Iraq's parliament approved a long-delayed budget on Saturday, the first since declaring victory over Daesh after three years of war, but Kurdish lawmakers boycotted the vote over their region's diminished allocation.

The budget of 104 trillion Iraqi dinars ($88 billion) is based on projected oil exports of 3.8 million barrels per day (bpd) at a price of $46, lawmakers told Reuters.

It envisions government revenues of 91.64 trillion dinars ($77.6 billion) with a deficit of 12.5 trillion dinars ($10.58 billion), according to lawmakers.

Parliament was meant to pass the budget before the start of the 2018 financial year in January but all three main blocs, Shia Arabs, Sunni Arabs, and Kurds, had serious issues with the government's proposal.

The budget cuts the semi-autonomous Kurdistan Regional Government's (KRG) share to 12.67 percent, down from the 17 percent the region has traditionally received since the fall of Saddam Hussein.

Iraq parliament had declared the September independence referendum in northern Iraq held by KRG non-binding and unconstitutional.

In October, Iraqi forces retook disputed territories, including the oil city of Kirkuk, that had come under Kurdish control in 2014, and Baghdad imposed sanctions on the KRG, such as suspending international flights from Kurdish airports.

Baghdad and the KRG had been engaged in talks for months about the sanctions and autonomous region's share of the budget.

The government said on Tuesday it had reached an agreement with the KRG to resume Kirkuk oil exports through Turkey's Ceyhan port but gave no precise timeline.

Competing Interests

Shia lawmakers wanted more spending allocated to the southern oil-producing, predominantly Shia, provinces as well as greater salaries and benefits for the Iran-backed Shia militias known as Popular Mobilisation Forces, who helped Iraq's security forces defeat Daesh.

Sunni lawmakers wanted more allocated towards reconstructing areas retaken from the militants, which were predominantly Sunni. The areas include Iraq's second city Mosul, which was retaken after nine months of urban warfare.

On Thursday the "three presidencies" of Iraq, its Shia prime minister, Sunni parliament speaker, and Kurdish president, met to discuss how to push the budget through.

Prime Minister Haider al-Abadi congratulated Iraqis over the passing of the budget on Saturday and said it was the result of cooperation between the executive and legislative branches.

Speaker Salim al-Jabouri said the budget addressed Kurdish concerns and that the federal government would pay the salaries of Kurdish civil servants and Peshmerga fighters, as well as welfare entitlements.

Baghdad had stopped paying salaries or making budget transfers to the regional capital Erbil in 2014 when the KRG started independently selling oil.

Oil exports, Iraq's main source of revenue, have risen above 3.4 million barrels per day this year but a global slump in prices for crude, compounded by the costs of rebuilding an infrastructure damaged by the war against Daesh, have battered the country's finances.

Last month, Iraq received pledges of $30 billion, mostly in credit facilities and investment, from allies at a reconstruction conference in Kuwait, but this fell short of the $88 billion Baghdad says it needs.

Source: Reuters