The Iraqi parliament, with a majority vote on Thursday, passed a financing law that gives the government access to much-needed funds to cover a widening financial deficit of approximately $28 billion.
Despite the emergency spending bill approving less than a third of the amount originally requested by the state, the secured funds will mainly cover public servants’ salaries, food imports and crucial projects.
Headed by Prime Minister Mustafa al-Kadhimi, the government asked parliament to support its borrowing of some $28 billion to cover spending for the next three months, but lawmakers only agreed to the state accessing $10 billion, an amount deemed sufficient to dispense the salaries of some 5 million public workers.
The parliament had failed to pass a draft budget for 2020 because of disputes between lawmakers. The emergency spending bill will allow the government to fulfill its obligations for the remainder of this year.
More so, differences emerged during Thursday’s vote after Kurdish lawmakers objected to an article binding the Kurdish Regional Government (KRG) to hand over revenues generated from regional oil exports as a condition for receiving its monthly share from the new funding plan.
The KRG is at odds with the federal government in Baghdad about the allocation of its oil revenue. Kurdish lawmakers say their share should not be linked to unresolved oil issues between Baghdad and their region.
The KRG said a top-level meeting would be held to decide an official position.
Most of the Kurdish lawmakers walked out of the voting session, lawmakers said.
The World Bank estimates Iraq’s economy will shrink 9.7% in 2020 due to lower oil prices and the coronavirus pandemic, following growth of 4.4% in 2019.
“The continuation of the parliament session until late at dawn on Thursday reflects an insistence to vote on the law with the aim of enabling the government to pay its obligations during the three months of the year 2020,” spokesman for the parliament speaker Shaker Hamed told Asharq Al-Awsat.
Hamed explained that there were differences over not restricting the state to loans and maintaining the optimal use of resources.
Regardless of how resources are secured, the government must be pushed to submit its budget for 2021 without debts that affect coming years, Hamed noted.
