Finance Minister Rafie Al-Esawi said he saw current oil prices as “good” and that higher-than-expected prices over the past weeks would help to cover Iraq’s budget deficit in 2011.
“We expect the rise in revenue coming from the difference in the (projected) oil price will be enough to cover the deficit planned in the 2011 budget,” he said on the sidelines of a banking event.
“Any increase in oil prices or a rise in oil production will be allocated to cover the deficit,” he added.
The new budget for 2012 allocates 40 trillion dinars for investments, the minister said. It still needs the final approval of the Iraqi cabinet and parliament.
In February, Iraq’s parliament approved an $82.6 billion budget for 2011 based on an average oil price of $76.50 per barrel and 2.2 million barrels per day in crude exports.
The 2011 deficit was projected at $13.4 billion, although Iraqi officials have said the shortfall will be eliminated if world oil prices remain at current levels. Oil prices have rallied above $100 a barrel for most of the year.
About 95 percent of Iraq’s government budget comes from oil revenue.
Budget shortfalls challenge Iraq’s ability to rebuild after years of conflict following the 2003 US-led invasion that ousted dictator Saddam Hussein.
Iraq has announced massive projects to build hundreds of thousands of new homes and to boost electricity generation.
