Iraq readies $42bn budget for 2008, dependence on oil to fall

Iraq readies $42bn budget for 2008, dependence on oil to fall Publish Date: Tuesday,9 October, 2007, at 02:21 AM Doha Time BAGHDAD: Iraq has prepared a $42bn budget for 2008, an increase of $1bn on this year, Finance Minister Bayan Jabor said.
“We have finished the budget and now all it needs is printing,” he told Reuters on Sunday. “It is $42bn, that is $1bn more than last year’s.”
Jabor said $10bn would be spent on investment projects outside the Baghdad region, focusing on schools and water projects.
An additional $4bn unspent this year would be rolled over into next year, boosting spending to $46bn.
“It will include investment money for $10bn and it targets supporting the southern, northern and western provinces. Their share will be increased by 55%,” he said.
“Also some amounts from 2007 will be ... given to the ministries and provinces. This will give ... extra money for the budget which means it is around $46bn.”
Jabor said Iraq calculated 2008 revenues based on assumed oil exports of 1.7mn bpd at $50 per barrel. Average exports in 2007 have been 1.6mn bpd, he said.
The 2008 budget also assumes an exchange rate of 1,260 dinars to the US dollar, the same as this year. But the government may strengthen the Iraqi currency to 1,200 to the dollar during the course of the year, Jabor said.
Last year the government strengthened the dinar by 13% against the dollar after raising interest rates to limit the use of dollars in the economy and stem inflation.
Iraq’s dependence on oil revenues will fall to about 88% next year from 94% in 2007 because of additional income from the telecommunications sector, Jabor said.
The dinar’s 13% gain against the dollar at the start of the year had helped boost central bank foreign currency and gold reserves to $22bn, Jabor added. He did not give a comparative figure for last year.
“We have it based on exports at 1.7mn bpd with a barrel at $50. The average in 2007 has been 1.6 (mn bpd), but what helped us this year is the rise in prices,” he said.
“This has helped Iraq a lot. If it were not for the high prices, we would have been in crisis.”
Jabor said the $42bn budget was estimated first at $37bn due to the decline in oil exports, but a recent push in exports from the north raised the budget level.
“We first set our budget at $37bn because of the decline in oil revenues in the first half of the year. We did not export a single barrel from Kirkuk in the first half of 2007, from January 1 of 2007 until June 30 of 2007,” he said.
He said budget dependence on oil in 2006 was 97%, in 2007 it was 94% and next year it would be between 88 to 90%.
“The rest is going to be revenues from the mobile (phone sector), which will make us less dependent on oil,” he said.
Iraq sits on the world’s third-largest oil reserves but the government has struggled to meet its estimated production and exports figures due to sabotage and mismanagement.
Exports from the north have been sporadic for most of the year, although the oil minister said that starting from early September the country had been exporting between 300,000 bpd to 350,000 bpd to Ceyhan in Turkey. – Reuters