Cash-strapped Iraq has agreed to trim its 2016 planned budget expenditure by ID13 trillion ($11bn), or 13% in nominal terms, as part of the fiscal consolidation demanded by the IMF to approve its $5.4bn standby arrangement (SBA) for Iraq (MEES, 15 July). This downward revision in expenditure became necessary because last October Iraq originally based its 2016 budget on oil price assumption of $45/B, but has since had to lower the oil price to $34.5/B.

If anything, this re-evaluation appears overly pessimistic. Iraq’s main Basra Light export grade has averaged $34.94/B in the first half of the year and current futures prices indicate that this could rise to around $39/B for the full year. (CONTINUED - 544 WORDS)