Iraq plans domestic borrowing to bridge $49bln deficit
Iraq intends to borrow again from the local financial market this year to bridge an expected budget deficit of 64 trillion Iraqi dinars ($49 billion), a government advisor said on Wednesday.
OPEC's second largest oil producer after Saudi Arabia has projected an average oil price of $70 a barrel in its landmark three-year budget for fiscal 2023-2025 years.
But the Arab nation sold its crude for nearly $75 in the first quarter of 2025 before prices plunged below the budgeted level due to the rising spectre of a global trade war and a recent decision by OPEC Plus to lift supplies by 411,000 barrels per day (bpd) for June.
'The government will adopt flexibility in the 2025 budget…this means that it will try to control expenditure,' said Mudhar Saleh, a financial advisor to Prime Minister Mohammed Al-Sudani.
Saleh told Iraq's Al-Forat TV that priority in spending this year would be given to salaries to civil servants, pensions and social care, which affects 8 million Iraqis.
'The 2025 budget envisages a deficit of IQD 64 trillion while spending was forecast at IQD 200 trillion ($153 billion)…the Finance Ministry will resort to borrowing whenever needed to cover the deficit,' he said.
In June 2023, Iraq approved a three-year budget for the period 2023-2025 based on an average oil price of $70 a barrel and crude exports of 3.4 million bpd.
Iraq's parliament has yet to pass the 2025 budget as it has not been sent by the cabinet apparently for fears funds may be used in campaigns for parliamentary elections, which are scheduled for November.
'A key reason for the delay in sending the draft budget for 2025 to parliament is that the government does not want funds to be exploited in election propagandas,' parliament's finance committee member Jamal Kocher said last month.
(Writing by Nadim Kawach; Editing by Anoop Menon)
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