As discussions on the Kurdistan Region's 2012 draft budget continue among members of the parliament and finance ministry officials inside and outside the parliament hall, MPs direct criticism at the ministry for the delays in the preparation and approval process of the budget, while the Finance Minister argues that Baghdad has been the main factor behind the delays.
According to Bayiz Talabani, Kurdistan Regional Government's (KRG) Minister of Finance and Economy, also attributes blame to the KRG council of ministers.
"We have submitted the draft to the ministerial council on February 26, but they did not send it to the parliament," explained Minister Talabani. "Since the sixth cabinet was at the end of its period in office, it did not work on the budget and left it for the seventh cabinet."
The ministerial council finally submitted the draft in May and after one month of review and preparation of reports by the parliament committees, the draft was put on the discussion tables in the parliament hall, six months into 2012, while according to the budget law, the draft should be prepared and submitted to the parliament two months before the start of the year in question, and within these two months the parliament should review and approve it. This means that the process is already 8 months behind.
Due to this repetition of the budget approval delays, people who depend on government loans for marriage, housing, industrial and agricultural projects have to also wait a few months. Besides, government projects also endure delays by delaying the approval of the budget, something that leads to failure in meeting completion deadlines, and some projects even failing to start the same year.
Dr. Ali Sindi, Ministry of Planning, on the other hands believes that these delays negatively affect the implementation of the projects and delivery of public services, and reiterates that the government and the parliament should find a solution to this issue.
Despite the delays in the approval of the federal budget, Baghdad continues to send one twelfth of the Region's previous year's share every month, but Minister Talabani argues that they cannot approve their budget until Baghdad approves the national budget.
On the contrary, Professor Hoshyar Maarouf, an economist, believes that KRG does not need to wait for Baghdad.
"More than 90% of Iraq's budget depends on oil revenues, and then we can estimate our budget based on production rates and market prices," argued Professor Maarouf in an interview with the Kurdish Globe. "If we estimate the oil price a bit below the actual market prices we can also avoid deficits."
Maarouf believes that Kurdistan's authorities should think of their share in the budget rationally based on previous years' experience, which used to be between 10% and 11% of Iraq's budget.
Parliament started its first session for budget discussion late in the evening of June 11th. The draft budget that is currently being worked on in the parliament is IQD 12.6 trillion (approximately USD 10 billion), out of which IQD 10.75 trillion goes for operating budget and less than IQD 4 trillion is left for investment, which leads to running a IQD 2 trillion deficit.
Talabani read his ministry's report about the budget during the session, which raised serious criticism from the opposition MPs who argued that the draft had a lot of shortcomings and did not follow the recommendations and decisions of the parliament in the previous years and requested that those who are responsible for these shortcomings be questioned.
Despite the noise created by the opposition MPs who were tapping on the chairs, Talabani continued the report and stated that 70.48% of this year's budget is spent for the government itself and only 28.52% goes for service and investment projects.
Dr. Aras Hussein, head of the parliament's finance committee, criticized this and stated that this year's operation budget is 14% higher than that of the previous year, while efforts should focus on lowering operating costs.
More than IQD 1.6 trillion goes for the purchase and maintenance of furniture and equipment for government offices, which is nearly half of the entire investment budget.
The investment budget, which was criticized last year as been very low, is now even 4.4% lower than 2011. Moreover, 72% of this budget is allocated for the completion of projects already started in the previous years rather than new projects.
Due to all of these factors, the Finance Committee suggested that new projects be taken out from the draft completely and the entire budget is spent on the incomplete projects to avoid this problem reoccurring next year.
One other point the finance committee raised was the revenues of the region, which they think is much higher than the figure entered into the draft, i.e. IQD 476 billion. MP Hussein asked the question why the revenues of the ministry of municipality were only 1% of the entire revenues of the region, and there is no indication to any revenues generated from the ministries of electricity and health.
The committee and a number of other MPs suggested that the budget for the three presidencies and the judicial council are high and should be lowered, while some of the members recommended that the loans given to people for housing, marriage and other purposes be increased, but since these are loans, they should not have any impact on the budget, as the government will eventually get these funds back.
Rumors that the recommendation to reduce presidencies, budgets is for the purpose of increasing housing loans, but the finance committee refuted this as they are two different issues and that the loans, funds are not entered into the budget.
These and numerous other questions and concerns are to be resolved inside the parliament before the final vote and approval, which is still not clear when it will happen.
- Iraq's 2012 budget is IQD 117.123 trillion
(approximately USD 100 billion)
- Kurdistan Region's share in the budget is IQD 12.6 trillion, i.e. 10.7% of the federal budget.
- KRG's operating budget share is 70.5%
- KRG's Investment budget is 29.5%
- Revenues are as below:
a. From Baghdad: IQD 12.605 trillion
b. Region's revenues: IQD476 billion
c. Petro dollar: IQD 120 billion
d. Total Revenues: IQD 13.2 trillion
- Expenditures: IQD 15.245 trillion
- Deficit: IQD 2.045 trillion