Mazhar Muhammad Salih, the financial and economic advisor to the Iraqi Prime Minister, stated on Saturday that the recently approved federal budget, endorsed by the President of the Republic and entered into force last week, does not currently require borrowing.
Salih clarified to Shafaq News agency that the budget is based on a deficit due to the decision to set the price of a barrel of oil at $70, combined with high expenditures. However, he assured that the budget deficit has potential solutions, including utilizing the surpluses achieved in 2022 and implementing other financial measures.
If the need for borrowing arises, Salih emphasized that Iraq will opt for internal borrowing through the issuance of treasury bonds by the Ministry of Finance. He pointed out that maintaining oil prices above $70 per barrel will help reduce the deficit, while a drop in prices below this threshold may lead to an additional deficit.
Salih highlighted that the crucial factor is the stability of the annual average of oil prices rather than short-term fluctuations within a month or two, as this ultimately determines the impact on the country’s revenue, considering the amount of oil production exported.
The Iraqi parliament voted on the financial budget for 2023, 2024, and 2025 on June 11, following four consecutive sessions marked by disagreements between political forces regarding particular articles.
The budget for the current year amounts to 197.828 trillion Iraqi dinars (approximately $152.2 billion), with a total deficit of 63 trillion dinars (about $48.3 billion). However, details of the budget items for the years 2024 and 2025 have not been released.