Budget unlikely to help ordinary Iraqis: economists

BAGHDAD, Feb 17, 2008 (AFP) —

Corruption will eat away at Iraq's 48 billion dollar budget, which is unlikely to bring much relief to the hard-hit Iraqi in the street and will turn the jobless into an army of beggars, economists say.

The gloomy prognosis is based on patterns of administering the budget in the past four years, which, they say, has been bedevilled by a lack of planning and technical expertise and an inability by provinces to spend allocated moneys.

The budget, passed on Wednesday after months of wrangling by the deeply divided parliament, devotes the lion's share to the security forces, which gets 8.85 billion dollars -- up from 7.5 billion dollars in 2007 -- and to education, which gets 4.13 billion dollars.

Other major allocations include 1.92 billion dollars to the health ministry and 1.37 billion dollars to electricity -- much of the latter expected to go towards upgrading infrastructure in a country still mostly in the dark.

Despite the healthy figures -- more than double what they were before the overthrow of the regime of Saddam Hussein -- economists believe not enough will filter down to ordinary Iraqis.
"The problem is not the size of the budget but whether it will be spent properly and free of financial and administrative corruption," said Baghdad economic expert Walid Khalid.

"What have citizens seen of last year's budget, which was also large? Approving the budget is not the problem; the problem is how much Iraqis will benefit from it," Khalid told AFP.

Economic researcher and financial journalist Husam al-Samook said that Iraq's economic governance since the US-led invasion in 2003 has been badly affected by lack of expertise.
"For four years in a row, we have not had the technical experts who know how to draft a budget or even how to implement one," said Samook. "There is mis-planning and mis-implementation."
Provincial administrations, in particular, have performed poorly, he said.

"The most effective rate of implementation of the budget in the provinces was only 60 percent (in 2007), while in some of the more volatile provinces it was only 10 percent," he said.
"Those who drafted the budget did not take into account the urgency of the need to create job opportunities nor design adequate investment programmes.
"They burdened the budget by setting aside more than 720 million dollars for the social sector to pay two million unemployed," said Samook.
"In fact what they are doing is converting two million people to beggars instead of putting this money towards investment programmes and projects that create jobs."

Economic expert in the finance ministry, Hilal al-Taan, acknowledged that the budget did not "wholly" meet the needs of Iraqis.
"The allocations for the defence (4.99 billion dollars) and the interior (3.86 billion dollars) ministries are the greatest because the security forces are at the forefront of ensuring security," said Taan.

"The budget is not ideal, we hope to do better in the coming years -- if the price of oil is increased."

Revenue projections for the budget were based on oil priced at 57 dollars a barrel, whereas prices are now projected to average 85 dollars a barrel this year.

Iraq's oil production reached an average of 2.38 million barrels a day in the fourth quarter of 2007, the highest level since 2003 but still short of pre-war levels of 2.5 million barrels a day.
Vice President Tareq al-Hashemi acknowledged defects in the government's financial and monetary policies, but said a committee of experts was being set up "to resolve the economic shortcomings."

Problems seen for Iraq Budget despite compromise

http://www.reuters.com/articlePrint?articleId=USL0686708920080206

Wed Feb 6, 2008

By Wisam Mohammed and Ahmed Rasheed

BAGHDAD (Reuters) - A compromise on the main sticking point holding up Iraq's 2008 budget appears possible but it and several other key reconciliation laws face potentially long delays, lawmakers and ministers said on Wednesday.

Iraqi lawmakers are set to vote on Thursday on the budget as well as laws governing the distribution of power between Baghdad and Iraq's 18 provinces and another that would free thousands of mainly Sunni Arab detainees from Iraqi jails.

Lawmakers have so far refused to ratify the $48 billion budget because of arguments over allocations between the provinces, particularly the largely autonomous northern region of Kurdistan.

The current draft of the law has allocated 17 percent of budget funds to Kurdistan, based on population estimates.

Shi'ite and Sunni Arab lawmakers say Kurdistan should receive about 13 percent because that is a more accurate reflection of the Kurdish population in the absence of any recent census.

Planning Minister Ali Baban, a Kurdish independent, said he would deliver on Thursday a report from his department with a compromise figure that showed Kurds made up about 14.5 percent of Iraq's estimated population of 27.5 million.

He said the figure was based on statistics available to his department, including the most recent national census in 1987.

Despite that estimate, Baban said he expected the budget to pass with an allocation for Kurdistan of 17 percent.

"I expect the budget for the region will be 17 percent because normally we give more than the percentage of the population to secure provinces to encourage these provinces to implements projects," Baban told Reuters.

JUMPSTART ECONOMY

Iraqi officials have said that failure to pass the budget would hold up vital spending at a time when Washington is urging the government to jumpstart the economy.

U.S. officials have praised the 2008 budget as well as this month's passage of a law allowing former members of Saddam Hussein's Baath party to rejoin the government. Washington introduced "de-Baathification" under U.S. administrators in Iraq after the 2003 invasion but acknowledged it went too far.

A U.S. embassy official said that matters of "political will" were holding up the budget. He said the fact that lawmakers would not be able to take their winter recess before the budget was passed might hasten the process.

"The parliamentarians are desperate to go on holidays ... that's adding to the dynamic and increasing their willingness to compromise," the embassy official told Reuters.
Lawmakers on both sides appeared unwilling to give ground.

"We consider the demands to lower our share of the budget below 17 percent are a political conspiracy against the Kurds and our rights," Kurdish lawmaker Mahama Khalil told Reuters.

Usama al-Nujaifi of the secular Shi'ite Iraqi National List said 14.5 percent was the most likely point for compromise.

"If the Kurds insist on 17 percent then many blocs will reject the budget in its current form," he said.
"It will be very difficult to pass the budget on Thursday."

Freeing prisoners has been one of the preconditions for the Accordance Front, the main Sunni Arab bloc, to return to cabinet after it quit last August over a number of differences with Prime Minister Nuri al-Maliki's Shi'ite-led government.

The amnesty law to be voted on would exclude those sentenced to death or convicted of killings, terrorism, kidnapping, drugs offences or corruption and would cover more than 23,000 prisoners held by Iraq but not detainees in U.S. custody.

(Additional reporting by Waleed Ibrahim and Paul Tait in Baghdad; Writing by Paul Tait; Editing by Elizabeth Piper)