Iraq’s parliament approved a $89bn federal budget on 31 March ending almost four months of deliberations that saw political disagreements within the country’s political ruling circles vocally surfacing and a marathon of negotiations between the central government and the Kurdistan Regional Government (KRG).
While the approved $20bn deficit cuts in half the initial eye-watering $40bn passed by the government in December (MEES, 24 December 2020), current expenses – mostly public sector wages – still dominate government expenses at 77%. At $69.3bn, this leaves just $20.4bn for capital spending. The budget also contains articles that impose a freeze on all new employment, whilst the budget also shyly attempts to unload government employees on to the private sector. As such, budgeted 2021 current spending actually represents an 18% improvement on the $85bn figure for 2019. Iraq failed to pass a budget for 2020. The deficit is a record in Iraqi Dinar terms with the 2021 budget seeing the currency devalued by 23% versus the US dollar. past year. In dollar terms, however, the $19.8bn deficit is down 15% on 2019. (CONTINUED - 1851 WORDS)