The budget plan covers the last three months of the year, focuses on paying public sector salaries and pensions, and includes a massive deficit.
“The 2020 budget draft that has been submitted by the government and sent to the Iraqi parliament has a very high deficit,” Ahmad Mullah Talal, spokesperson for prime minister Mustafa al-Kadhimi, told reporters in a press conference in Baghdad on Monday. “The 2020 budget plan will cover all the salaries of the public servants and the retired employees of the government.”
State media published details from the budget draft. Expenses are estimated to be 148 trillion dinars (about $123.7 billion) and income just 67 trillion dinars (about $56 billion), meaning the deficit will stand at 81 trillion dinars (about $67.7 billion).
State media also revealed that Baghdad has internal and external debts of around 27 trillion dinars ($22.5 billion).
The 2021 budget is currently under review and will be different from previous years as the government aims to meet the demands of the Iraqi people, Talal said. Baghdad needs to make extensive investments in public infrastructure, such as the electricity sector. Lack of basic governmental services is a rallying cry of public protests.
Each year sees a tedious and prolonged debate over the federal budget, and with each passing month apprehension rises over the potential disaster that could unfold if an agreement is not reached. It has happened once before. In 2014, lawmakers failed to table a budget because of low oil prices. This year, a political crisis delayed finalizing the budget draft. Baghdad had no active government for more than five months after Kadhimi’s predecessor Adil Abdul-Mahdi resigned last fall in the face of protests. Kadhimi was sworn into office on May 7.
In June, Finance Minister Ali Allawi said the government would not move forward with preparing a budget for 2020, but would instead focus on 2021.
Iraq has almost exclusively relied on oil revenues since the US invasion in 2003. In June, Kadhimi stated that the country currently gets 94.7 percent of its income from oil sales.
The huge budget deficit is due to record low oil prices at the beginning of this year, compounded by the COVID-19 pandemic.
The large number of civil servants is also a headache for the government. Iraq's government has three million employees on its payroll who need to be paid $36 billion annually. This figure does not include contract employees or those on daily rates, according to government data.
Economic strife was one of several grievances that drove Iraqis onto the streets late last year. Initial calls for reform centered on unemployment, dissatisfaction with the Iraqi political elite who have dominated Baghdad since 2003, and corruption and cronyism in the public sector, but quickly evolved into calls for a complete change to the governmental system.
More than 600 people have died as a result of lethal force used to quell the nationwide protests, according to Amnesty International.
