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Iraq, in a bid to curb its deficit, will cut capital spending by 26% for 2016. But cuts to upstream investment threaten to halt rising oil output. Never mind the official 9mn b/d 2022 target, even more sober estimates of 6mn b/d have been thrown into doubt as companies come under further pressure to cut spending.
Iraq’s finance ministry on 14 September submitted to the cabinet its 2016 draft budget. This “attempts to reduce public expenditure, combat the squandering of state resources and diversify sources of national income,” the draft law says.
Spending is slated to fall by 5% to ID113,506bn ($99.65bn), down from ID119,462bn in the 2015 budget. Revenue projections are cut by ID10trillion to ID84,073bn ($73.81bn). These figures imply a budget deficit of ID29,433bn ($25.84bn) in 2016, up from ID25,414bn in the 2015 budget. Oil revenue is projected at ID69,773bn ($59.3bn), or 83% of total revenue, up from the over-optimistic 2015 figure of ID78,649bn.
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