Iraq's budget coming 'soon' as country seeks to unlock funds for pressing needs

Political wrangling over the formation of a new government hindered the approval of the 2022 budget

US and Iraqi banknotes at a currency exchange in Baghdad. The country's 2023 budget will be sent to Cabinet 'very soon', its Finance Ministry said. Reuters

Iraq, Opec's second-largest oil producer, has started to prepare the country's much-needed 2023 budget, a senior government official has said.

Finance Ministry adviser Abdul Hassan Jamal did not give a date as to when the budget will be completed but said it would be sent to Cabinet "very soon”.

The controversial issue of the exchange rate against the US dollar will not be addressed in the budget, Mr Hassan told the Iraqi News Agency.

“Amending the exchange rate is a government policy and, therefore, the Cabinet is the one which decides,” Mr Jamal said. “Until now, there is nothing in the budget on that.”

Political wrangling over the formation of a new government after national elections in October last year delayed the approval of the 2022 budget, leaving the caretaker government with limited access to funds.

Iraq's Parliament approved the Emergency Law for Food Security and Development in June to meet some of the country's most pressing needs.

The law introduced a 25-trillion Iraqi dinar ($16.9 billion) programme to subsidise food and improve service delivery, including in the power sector throughout this year.

On Thursday, Parliament confirmed the new government, paving the way for the preparation of the budget. Once completed, it will sent to legislators for final approval.

Prime Minister Mohammed Shia Al Sudani said getting the budget approved was a priority for his government.

However, it remains unclear how much money will be allocated for next year within the budget. Last year's budget stood at 130tn dinars ($89.6bn), with an estimated deficit of 28.7tn dinars.

As of early last month, the country's foreign reserves stood at $85bn, the highest since the 2003 US-led invasion that toppled Saddam Hussein, according to the Central Bank of Iraq.

Foreign reserves are expected to increase to $90bn by the end of the year, the central bank said, thanks to the rise in oil prices and the devaluation of the currency in December 2020.

Iraq's monthly oil revenue hit a historic high this year, exceeding $10 billion in some months.

The country boosted its gold reserves to 130.4 tonnes last month, it said.