Parliament approves 7% hike in 2024 budget
Parliament’s recent approval of a 7% increase in overall budgetary spending marks another worrying development in Iraq’s fiscal landscape.
Following a vote on June 3, the government’s revised 2024 budget tables were approved, resulting in an additional 13 trillion IQD in spending and bringing total expenditure to an unprecedented 211 trillion IQD.
The government projects a 10% increase in revenues for the year, partly based on a revised estimate of oil revenues, complemented by a policy redirecting all revenues from electricity tariff collection back to the treasury, and increased income from the sale of petrochemical products.
Significant allocations in the revised budget include the addition of 650,000 families to the social security network for one year, an increase in the capital funds of the Real Estate Bank, and additional spending on the purchase of wheat and rice from local producers. Furthermore, more funds are allocated to pay debts, including an extra 800 billion IQD for the KRG’s debts.
The size of the projected deficit remains similar to last year’s, with a significant portion—53%—to be covered by the Central Bank and state-owned banks. This reliance on internal borrowing highlights a critical vulnerability in Iraq's financial strategy. Additionally, the Finance Ministry's announcement today that it had transferred funds to cover KRG salaries for the month of May further emphasizes the government's ongoing fiscal commitments.
The revised budget reinforces a troubling trend of incremental increases in public payroll and social welfare commitments, without significant measures to reduce dependence on oil revenues. Furthermore, the government’s projected non-oil revenues are unrealistic and will not be realized by the end of the year. As such, while the budget reflects an ambitious financial plan, it underscores the need for structural reforms to diversify the economy and ensure long-term fiscal stability.