Iraq adopts new budget, slashes funds for Kurds

Iraq’s parliament cut funds allocated to the Kurds in its 2018 budget released on Saturday, AFP reported.

The reduction follows a controversial independence referendum by the Kurds last year that sparked a furious dispute with the central government - the September 2017 poll had 92 per cent of Iraqi Kurds voting for independence. 

The $88.5 billion budget is based on projected oil exports of 3.9 million barrels per day at a price of $46 per barrel.

Saturday’s price of Brent Crude oil is trading at more than $64 a barrel.

The budget also projects $77.5 billion in revenues, with a $10.6 billion dollar defecit.

Kurdish lawmakers boycotted the budget vote, protesting a cut in their allocation from 17 to 12.6 per cent. The Iraqi constitution stipulates that Kurdistan’s share of the annual budget must reflect its demographic weight.

The text of the 2018 budget says that the Kurdistan Regional Government must export 250,000 barrels per day of oil and hand over money from its sales to federal coffers.

“If Kurdistan does not hand over (the money), the finance ministry will take it from its part of the budget,” it said.

The Kurdish Peshmerga forces took control of Kikuk – home to key oil fields – in June 2014 after the federal government withdrew during a battle with the Islamic State.

Federal forces recaptured the Kirkuk oil fields, a lifeline for the Kurdish economy, following the independence referendum.

Recently, Iraqi officials asked BP to bolster production in Kirkuk as part of the state's efforts to improve its finances. 

The 2018 budget also includes some austerity measures as Iraq looks to rebuild after its years-long fight with the Islamic State has drawn to an end.

The Iraqi economy has struggled from both low oil prices and the high costs of waging war with the Islamic State. 

In addition, $88.2 billion will be needed for reconstruction according to Iraq's planning minister. Weeks earlier, donors pledged $30 billion in loans to help with the costs.