Iraq plans to cut 2009 budget by $13 billion

October 31, 2008 4:58:47 AM PDT
Iraq plans to cut its 2009 draft budget to $67 billion in light of falling world oil prices, finance ministry officials said. Iraqi authorities set the original draft budget last month at around $80 billion, based on expectations that the average price per barrel of oil would not drop below $80.

But prices have slipped sharply since summer highs. On Friday, oil for December delivery was down $1.44 to $64.52 a barrel in electronic trading on the New York Mercantile Exchange by midmorning in Asia.

That drop has forced Iraq, which is dependent on oil revenues for more than 90 percent of its national capital budget, to revise its 2009 draft budget, Finance Ministry spokesman Adnan Abdul-Rahman said Friday.

A day earlier, Finance Minister Bayan Jabr said after a meeting with IMF officials in Amman, Jordan, that the ministry had decided to cut $13 billion from the planned 2009 budget.

"An agreement was reached to consider $67 billion as the 2009 budget instead of the recently set draft budget of $80 billion," he said in comments broadcast on Al-Sharqiya television.

Jabr said the revised budget is based on an assumed oil price of $62 per barrel, lower than the original estimate of $80.

He added that "many sectors" will be affected by the cuts, but did not specify.

Ministry spokesman Abdul-Rahman said officials were slated to meet Saturday to discuss the budget, but that it was not clear when a final draft would be ready.

Iraq is home to vast oil reserves with a proven 115 billion barrels. Its daily production stands near 2.4 million barrels a day.


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