OPEC’s second-largest producer, Iraq, approved on Monday its 2023 budget of $153 billion (198.9 trillion dinars), envisaging record spending and basing the budget on an oil price of $70 a barrel.
Oil revenues are the most important income for Iraq as they account for more than 90% of its total revenues.
The new budget for 2023, belatedly approved by Parliament today after months of disputes, also has new provisions regarding the sharing of oil revenue between the federal government in Baghdad and the semi-autonomous region of Kurdistan in the north.
The new provisions say that Kurdistan will deposit the revenue from its oil exports in a bank account that the central government can monitor. The federal government will deduct the amount of oil revenue from the monthly budget allocations to Kurdistan, Associated Press notes.
Iraqi lawmakers told Reuters that the budget was based on the assumption of oil exports of 3.5 million barrels per day (bpd), including 400,000 bpd from Kurdistan.
Iraq exported on average 3.3 million bpd of oil in May, flat compared to April, according to the Iraqi oil ministry. Iraq is currently exporting oil only via its southern oil export terminals, with around 450,000 bpd of exports from the northern fields and from Kurdistan still shut in due to a dispute over who should authorize the Kurdish exports.
Kurdistan’s exports—shut-in since March 25—have yet to resume. At the end of May, reports emerged that a flare-up between the regional government in Kurdistan and the federal Iraqi government added risk for the resumption of oil flows from the northern Iraqi region.
Overall, Iraq’s economic growth has lost momentum in recent months, due to foreign exchange market volatility and reduced oil production, the International Monetary Fund (IMF) said at the end of May.
“The combined effects of increased government spending, the exchange rate revaluation, and reduced oil production would bring the fiscal break-even oil price to $96 per barrel,” the IMF’s staff team said.