Iraq Signed Off on 2023 Budget 600,000 New Workers Added to the Budget
GREAT NEWS, EVERYONE! The Iraqi legislature has signed off on a gigantic 2023 budget of 198.9 trillion dinars ($153 billion). This record-breaking spending will be used for public wages, development projects, and reparations to infrastructure ruined by war and disregard.
The shortage is anticipated to reach 67.36 trillion Iraq dinars, which indicates it's more than twofold the last deficit in 2021, based on the data in the budget report as well as comments from lawmakers.
The oil price used in this budget is $70 per barrel, along with oil exports projected at 3.5 million barrels each day (bpd), including 400,000 bpd from the semi-autonomous Kurdistan region.
This budget states that the exchange rate for oil revenues denominated in U.S. dollars will be 1,300 dinars per dollar, effective through 2025. It is liable for an amendment if required, particularly regarding the oil cost factor, given Iraq’s acute reliance on oil revenue.
The most remarkable part is that half a million jobs will be created in addition to existing ones, including contractors, daily employees, and full-time staff.
Ahmed Tabaqchali, a visiting fellow from the London School of Economics Middle East Center, estimates that 600,000 new workers were taken on, which would take the total cost of public wages and pensions to beyond $58 billion (76 trln dinars).
"The longer these expenditures are kept up, the more exposed Iraq becomes," he said. "To keep funding government spending at current levels, oil prices will have to continually rise."
The International Monetary Fund noted in its May 31 report that Iraq needs a minimum of $96 bpd to break even; however, oil averaged $71.3 bpd across the month. They advise that a tighter fiscal policy is necessary to reduce reliance on petroleum revenue and safeguard essential social services.
Iraq's budget is usually passed late or not at all due to civil unrest and political disagreements. With one of the fastest-growing populations in the world, set to double between now and 2050, the nation faces high unemployment rates and frequent demonstrations due to grievances.
This year's budget plans account for longstanding issues between Baghdad and Kurdistan by placing oil revenues into an Iraqi central bank-governed fund. Previously, Baghdad had no control over Kurdistan's used petroleum money as they independently shipped crude through Turkey regardless of Baghdad's protests.
In April, after Turkey blocked the crude oil exports that an international arbitration declared illegitimate, Kurdish authorities were obliged to enter negotiations with Baghdad. This resulted in a contract handed out by Iraq’s SOMO, granting them access to export petroleum produced from Kurdish-controlled fields. Even though Baghdad requested Turkey to resume the flows on May 11, this has not happened yet. (One US dollar equals 1 300 Iraqi dinars.)
