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The Coalition Provisional Authority (CPA) has recently drawn up an emergency budget for Iraq for the second half of 2003. The budget projects expenditures of $6,099.6mn, revenues of $3,887.7mn and a deficit of $2,111.9mn. Oil revenues are projected at $3,445.0mn and are “fully committed to programs that benefit the Iraqi people.” Revenues from transfers from state enterprises are estimated at $373.6mn, while those from taxes, fees and charges are projected at $59.1mn. The budget sets the value of the Iraqi Dinar at $1=ID1,500.

In its budget summary, the CPA said that the interim budget set the groundwork for the preparation and authorization of the budget for 2004. It was prepared using “the existing systems, forms and formats that have traditionally been used in Iraqi budgets. Each Iraqi ministry and Kurd region prepared a budget with their Coalition Senior Advisor. That budget was discussed with the Coalition Finance Advisor. The proposed budget was then reviewed by appropriate officials from the Iraqi Finance and Planning Ministries, briefed to AID and UN representatives and approved by the CPA Program Review Board.” According to the CPA, major priorities addressed include the reconstruction and restoration of essential facilities and services such as water, electricity, education and health care, and restoring and revitalizing the banking system, productive enterprises, agriculture and trade to reintegrate Iraq into the world economy.

Table 1

Budget Summary

($Mn)

Table 2

Budget Financing

($Mn)

Key initiatives in the budget include: electrical improvements, $294mn; a reduction of $269mn in subsidies to state-owned enterprises; reconstruction, $257mn; security and justice improvements, $233mn; defense funding, $225mn; public health improvements, $211mn; communications improvements, $150mn; and water and sewerage improvements, $73mn. The CPA added that in addition $900mn/year has been redirected from army and special Ba’thist programs to the needs of the Iraqi budget.

Table 3

Operating Expenses by Input

($Mn)

With regard to allocation of expenditures by organization, the CPA does not give any estimates of the operational and capital expenditure for the Ministry of Oil, but it says that these will be funded through extra realized revenues, with over $1bn of capital expenditure to be funded off-budget. MEES understands that while the salaries of the employees of the Ministry of Oil are being paid by the Iraqi Ministry of Finance, the oil sector has of now no funds for rehabilitation. The accounts of the Ministry of Oil in local banks have been frozen, along with those of other ministries. Any funds for the oil sector are available only through the sale of local petroleum products. The Ministry of Oil has asked that $2/B should be allocated to it for each barrel of crude oil produced, but the matter is still under discussion.  

Table 4

Other Proposed Expenditure

($Mn)

© Copyright MEES 2004.