Iraq Budget 2012
Highlights of Iraq Budget 2012:
- As part of its 2012 Iraq budget estimates the national government expects that the average price of every barrel of crude oil will be 95 US dollars in the upcoming fiscal.
- Economic adviser of the Iraqi government, Salam al-Quraishi, has stated that the national administration estimates oil prices to stay above US$90 per barrel.
- An estimated 112 billion US dollars are supposed to be spent in the 2012 Iraq budget. The amount earmarked is 36 percent more than the allotment for 2011 fiscal and there will be a budgetary deficit of US$ 20 billion according to governmental estimates.
- The 2012 budget has been prepared in accordance with an agreement between Iraq and the International Monetary Fund, regarding the proper allocation of financial resources that will be necessary for increasing the values of various investment related projects.
- As per government officials in Iraq the 2012 budget will be able to focus equally on operational and developmental projects.
- The budget forecasts made by the Iraqi Central Bank have been done on the basis of an estimated oil price of 80 dollars for each barrel.
They are based on the estimation that Iraq will export 2.6 million barrels of oil on a daily basis in 2012.
- The Ministry of Oil of Iraq expects that the exports will increase substantially in 2012.
- The 2012 budget could be reviewed if there are changes in oil prices. Haitham al-Jubori, an MP, has stated that the government is willing to peg oil prices at 80 dollars per barrel but expects the prices to go up to US$85.
- The security sector has been allotted 15 percent of the money earmarked in the 2012 Iraq budget.
- The estimated earnings for Iraq in 2012 are expected to amount to 91.27 billion US dollars. As per Ali al-Dabbagh, a government spokesman, the deficit can be offset by the surplus earned after the 2011 fiscal.
He also expects increased oil production will be helpful in this regard. It is expected that the government will earn higher than its projected income for 2011 fiscal due to the increase in oil prices.
- In 2012 $16.95 billion US dollars have been allotted for the upgradation of stability and security systems and $12.71 billion has been set aside for welfare support programs and initiatives.
- The educational sector will be allotted $8.9 billion US dollars in 2012 and the energy and industrial sector will be provided US$4.24 billon.
- Ali al-Shukri, the Planning Minister of Iraq, has stated that the government will try to allocate 51 billion US dollars or 60 trillion dinars in its investment budget for 2012.
Previously they had earmarked US$34 billion for such projects.
Expectations from Iraq Budget 2012:
In the last couple of years, Iraq has been planning to operate with a deficit budget but they have never faced any shortfall whatsoever. As per analysts Iraq has never used the total budgetary allocation because of lack of skilled politicians and overall capacity to spend such substantial amounts of money. They have also blamed the fiscal regulations and bureaucratic issues as other reasons for the predicament.
In 2011 Iraq earned more than expected revenues from the oil sector because of the increasing prices in the international market. Various statistics state that the Asian country earns almost 89 to 95 percent of its revenues from oil.
An Iraqi Central Bank consultant, Muatasem Akram, has stated that the predictions are justifiable but are still lesser than the potential prices of oil across the global markets in 2012 fiscal.
Akram has also stated that the bank’s forecasts could create a budgetary deficit as they were fairly low but he opines that it is necessary to provide realistic and achievable projections.
He feels, though, that the fiscal deficit could be offset by fixed prices of oil and increasing the exports. Akram also states due to the projected lower figures of exports the Iraqi government will be able to divert more resources to its developmental plans.
The predictions of the Iraqi Central Bank have been further influenced by OPEC’s predictions of stability in global oil consumption in 2012 fiscal. According to the Iraqi finance minister Rafie al-Esawi, though, the investment budget might not be sufficient to fund the developmental initiatives or start new ones.
The Planning Ministry of Iraq has said that the budget needs to be adopted quickly so that the infrastructure can be rebuilt. Iraq has suffered from several wars and sanctions and currently is in a critical condition.