OPEC member Iraq fears it could suffer from a heavy budget deficit in its next two fiscal years if oil prices fall below the budgeted price of $70 a barrel, the country’s Presidential adviser was quoted on Friday as saying.

Mudhar Saleh said he expects the 2023 budget deficit of 64 trillion Iraqi dinars ($49 billion) to be largely trimmed due to a surge in crude prices following an announcement by Saudi Arabia and Russia, the world’s largest oil producers, that they will maintain output cuts until the end of 2023 to keep prices firm.

Saleh said the shortfall will be furthered reduced because there was a surplus of IQD23 trillion ($17.5 billion) in the previous year and part of the budgeted expenditures did not materialise for some reasons.

“I think the recent improvement in oil prices will help this year’s budget as it will lead to a reduction in the deficit…this will allow the government to spend more on projects without the need to borrow,” Saleh told Iraq’s Alforat News network.

“As for the budget in the next two years, if oil prices go below $70 a barrel the cumulative deficit could be about IQD165 trillion ($126 billion)…this is a very large deficit and a heavy burden on the state coffers.”

Seeking fiscal stability, Iraq in June approved a three-year budget with record spending of $153 billion in each year.

(Writing by Nadim Kawach; Editing by Anoop Menon)


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