Draft Federal Budget Law of the year 2019

Draft Federal Budget Law of the year 2019

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Shatha Khalil *

The General Secretary of the Council of Ministers announced on Sunday the approval of the Council on the draft federal budget of the Republic of Iraq for fiscal year 2019. On the basis of what was approved by the Iraqi Council of Representatives and ratified by the President of the Republic of Iraq and based on the provisions of item (1) of Article ( 61 ) and item III of Article (73) of the Iraqi Constitution, the Iraqi draft Federal Budget Law was issued for the year 2019 which revealed the revenues of the General federal budget for fiscal year 2019 in the amount of (105569686870) Iraqi dinars (one hundred and five trillion five hundred and sixty-nine billion six hundred and eighty-six million eight hundred and seventy thousand ) Iraqi dinars, including oil revenues estimated at more than ninety three trillion Iraqi dinars, and Non-oil revenues estimated by eleven trillion Iraqi dinars.
These revenues were calculated from the export of crude oil at the rate of (56) dollars per barrel and the export rate of (3.88) million barrels per day, including (250) thousand barrels per day of the quantities of crude oil produced in the provinces of the Kurdistan region on the basis of exchange rate (1182) dinars to the dollar, and all revenues actually achieved are registered as a final revenue for the state treasury.
The documents showed that the total expenditure estimated at more than (128.443) trillion dinars, including the amount of premiums of internal and external debt, which is estimated at more than (11.188) (eleven trillion and one hundred eighty eight billion) Iraqi dinars. A planned deficit of the federal budget, amounting to more than (22.873) trillion dinars, and this deficit is covered by the abundance achieved by the increase in crude oil selling prices exported , and increase the exports of crude oil, and internal and external borrowing, except for loans financed by foreign entities for projects listed within the gap scheduling by funding the deficit, and from the amount of cash in circulation in the Federal Ministry of Finance account.

The deputy of the Ministry of Finance, Dr. Maher Hammad Johan, said that the draft general budget for the year 2019 focused on providing job opportunities and developing services provided to citizens.
And focused on the file of services for all governorates according to the necessary allocations for them, and to provide employment opportunities widely.
And that the volume of spending in this budget, greater than revenues, as Johan said that the use of legal texts facilitate the application of paragraphs on private sector projects, as it will accelerate the progress in Iraq, especially that most countries expressed their desire to enter the Iraqi market and the establishment of projects and investment in exchange for facilitating its work , explaining that the stability of the security situation will greatly help the successful implementation of the budget paragraphs.
He added that the current oil prices help to bring about these changes, since the price of a barrel of oil exported about (56) dollars, which gives the state a broader scope to strengthen services and social expenses such as salaries and expenses of education, health and medicine and expenses of the ration card and subsidies and social protection networks, and there will be no deficit either by allocating or financing, and supporting project activities that benefit the market and which activate the private sector to occupy its real space by providing jobs and appropriate infrastructure for services, or enhancing productive activities.
He added that despite this, the rise in international oil prices helped to find the treatment of financing the budget deficit of up to (12.5) trillion dinars, which rose to (19) trillion dinars after approval by the House of Representatives, explaining that the difference in prices helped to pay off the deficit ,as Iraq has not resorted to external or internal borrowing, but this has been positive.
And on the debts of Iraq, and whether there is a clause in the federal budget indicates that, the deputy of the Ministry of Finance stressed that there is an item of debt in the budgets (2018/2019) and there are debts of various denominations for the budget, both internal and external, revealing that Iraq is currently pay off within the debt schedule ( 12) trillion Iraqi dinar between the original debt and interest related to the debt and it also reimburses the state’s debt to the private sector with respect to the contractor’s entitlements as well as Iraq paid off the debts of the farmers for the years (2014-2017), denying the existence of any debt to farmers and contractors, and only remained (30%) that the ministry is seeking to repay them at the beginning of next year, It will place a text in the budget to ensure the provision of appropriate allocation of funding.

Budget of the Kurdistan Region:
Article (9 / I) of the Budget Law specifies the share of Kurdistan Region as follows:
First: Of the total actual expenditures stated in the budget (ruling expenses) according to the population of each province, and paid by the Ministry of Finance and the approval of the Prime Minister.
Second: Determine the share of the Kurdistan region from the total actual expenditure (current expenditures and expenditures of investment projects) according to the population of each province after the exclusion of sovereign expenditures.
Article (10 / I): the receivables between the Kurdistan Region and the Federal Government were settled for the years from 2014 to 2018, after being audited by the Federal Audit Bureau, by calculating the share of the provinces of the Region in light of the actual expenses of previous years shown by the final accounts approved by the Federal Audit Bureau.
• The Kurdistan Regional Government is committed to export at least 250,000 barrels of crude oil per day of crude oil produced from its fields, to be marketed exclusively through SOMO, and to hand over revenues to the Federal General Treasury.
• Allocating the proportion of allocations of the federal ground forces of the Iraqi army to the salaries of the Peshmerga forces, according to the population ratios of the said forces, as part of the Iraqi security system.
• When the Kurdistan Region does not pay the federal revenues received to the federal public treasury, or failure to implement the provision of two paragraphs of this item, the Federal Ministry of Finance to deduct the specified share and then settle the calculation.
• In the case of the increase of exported quantities, the federal government and the provinces of the Kurdistan region are committed to deliver revenues actually realized to the state treasury.

As for the proposed items mentioned in the budget:
• Suspension of appointments in the three presidencies, the departments and entities affiliated to (the Presidency of the Republic, the Council of Representatives, the Council of Ministers) and the transfer of services or appointment are not permitted except with the approval of the Prime Minister.
• Based on the proposal of the Prime Minister, restructuring ministries and entities not linked with the Ministry, and the bodies and governorates by merging their formations, including public companies with existing departments, or change the body of its link or transfer, and determine their tasks or the abolition of these formations.

Translated by : mudhaffar al-kusairi

Economic Studies Unit
Rawabet Center for Research and Strategic Studies