Iraqi parliament approves budget, Kurdish lawmakers boycott vote

BAGHDAD — Iraq's parliament approved a long-delayed budget on Saturday, the first since declaring victory over Daesh after three years of war, but Kurdish lawmakers boycotted the vote over their region's diminished allocation.

The budget of 104 trillion Iraqi dinars [$88 billion] is based on projected oil exports of 3.8 million barrels per day [bpd] at a price of $46, lawmakers told Reuters.

It envisions government revenues of 91.64 trillion dinars [$77.6 billion] with a deficit of 12.5 trillion dinars [$10.58 billion], according to lawmakers.

Parliament was meant to pass the budget before the start of the 2018 financial year in January but all three main blocs, Shiite Arabs, Sunni Arabs, and Kurds, had serious issues with the government's proposal.

"We boycotted the vote and there are proposals for Kurdistan to withdraw from the entire political process in Iraq over the unfair treatment we have received," said Kurdish MP Ashwaq Jaff.

The budget cut the semi-autonomous Kurdistan Regional Government's (KRG) share to 12.67 per cent, down from the 17 per cent the region has traditionally received since the fall of Saddam Hussein.

The Kurds overwhelmingly voted to secede in an independence referendum in September, which was opposed by Baghdad.

In October, Iraqi forces retook disputed territories, including the oil city of Kirkuk, that had came under Kurdish control in 2014, and Baghdad imposed sanctions on the KRG, such as suspending international flights from Kurdish airports.

Baghdad and the KRG had been engaged in talks for months about the sanctions and Kurdistan's share of the budget.

The government said on Tuesday it had reached an agreement with the Kurds to resume Kirkuk oil exports through Turkey's Ceyhan Port but gave no precise timeline.

The projected 3.8 million bpd exports in the budget include a 250,000bpd contribution from the Kurdistan region, lawmakers said on Saturday. It was not immediately clear what effect the Kurdish boycott of the vote would have on that.

Competing interests

Shiite lawmakers wanted more spending allocated to the southern oil-producing, predominantly Shiite, provinces as well as greater salaries and benefits for the Iran-backed Shiite militias known as Popular Mobilisation Forces, who helped Iraq's security forces defeat Daesh.

Sunni lawmakers wanted more allocated towards reconstructing areas retaken from the militants, which were predominantly Sunni. The areas include Iraq's second city Mosul, which was retaken after nine months of urban warfare.

On Thursday the "three presidencies" of Iraq, its Shiite prime minister, Sunni parliament speaker, and Kurdish president, met to discuss how to push the budget through.

Prime Minister Haider Al Abadi congratulated Iraqis over the passing of the budget on Saturday and said it was the result of cooperation between the executive and legislative branches.

Speaker Salim Al Jabouri said the budget addressed Kurdish concerns and that the federal government would pay the salaries of Kurdish civil servants and peshmerga fighters, as well as welfare entitlements.

Baghdad had stopped paying salaries or making budget transfers to the Kurdish regional capital Erbil in 2014 when the Kurds started independently selling oil.

Oil exports, Iraq's main source of revenue, have risen above 3.4 million barrels per day this year but a global slump in prices for crude, compounded by the costs of rebuilding an infrastructure damaged by the war against Daesh, have battered the country's finances.

Last month, Iraq received pledges of $30 billion, mostly in credit facilities and investment, from allies at a reconstruction conference in Kuwait, but this fell short of the $88 billion Baghdad says it needs.