BAGHDAD ¨C Falling oil prices have forced Iraq to scrap the draft 2015 budget it planned to present to parliament on Sunday, Prime Minister Haidar al-Abadi told lawmakers.
The budget had been based on a forecast oil price of $70 a barrel, but prices dropped to a four-year low below that level on Friday after OPEC¡¯s decision not to cut production.
¡°Two days ago, the price of a barrel fell to $64,¡± Abadi said. ¡°It may be a small difference, but the budget was originally very tight. With this fall, the budget was not possible in this form.¡±
He told parliament that the Cabinet had agreed to form a committee to look at drafting a new budget from scratch, focusing spending on absolute priorities, and would aim to present it to parliament in a week to 10 days.
Abadi said the oil price fall, coupled with disruption to production in Kirkuk this year, had had a devastating impact on revenues at a time when the government faces huge costs battling Islamic State fighters controlling much of north and west Iraq.
¡°Half the income has gone in one go,¡± he said.
Finance Minister Hoshyar Zebari told Reuters last week the original budget envisaged spending of over $100 billion. Abadi put the figure at 150 trillion Iraqi dinars ($125 billion).
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