SULAIMANI (ESTA) — Iraqi Council of Ministers on Saturday postponed a vote on the draft federal budget law for fiscal year 2021, Iraqi media reported.
Iraqi Council of Ministers held an extraordinary meeting chaired by Prime Minister Mustafa al-Kadhimi to discuss the country’s draft federal budget law for 2021.
Iraqi state news agency INA reported that the council of ministers postponed the vote on the budget bill to Sunday.
A leaked draft of Iraq’s state budget sent Iraqis into a panic as it confirmed the government’s intentions to devaluate the national currency and cut salaries to cope with the impacts of a severe economic crisis.
Discussions about devaluating the Iraqi dinar, which has been pegged to the dollar for decades, have been going on for weeks as the government worked to finalized the 2021 budget, AP reported.
The draft law, which has to go through a parliament vote first, gives an anticipated exchange rate of 1,450 Iraqi dinars for the dollar — a significant drop from the central bank’s current official rate of around 1,182 dinars for $1.
The anticipated rate in the draft of 1,450 dinars against the dollar “will help cover the financial deficit, but, of course, if they don’t manage to make some supportive steps for poor people, then the impact of inflation will be very severe,” said Mohammed al-Daraji, a lawmaker in the finance committee.
As the draft made rounds on social media, the Finance Ministry expressed “resentment and deep regret over the unauthorized publication” of the proposed law, saying public hysteria would impact the neutrality of ministers, according to AP.
“Budget preparation is a complex technical process … over a long period of time,” the ministry said. “Releasing it prematurely to the media is a largely irresponsible act.”
Facing a severe liquidity crisis brought on by spiraling oil prices, the crude-exporting Iraq has had to borrow from the central bank’s dollar reserves to pay the nearly $5 billion in monthly fees for public salaries and pensions. Oil revenues, which account for 90% of the budget, have brought in an average of $3.5 billion since the oil price crash earlier this year.
The government plans to cover its deficit in the draft federal budget law, which is estimated at 58 trillion dinars ($48.698 billion).
Income is set at 92 trillion dinars, with oil revenue standing at 73 trillion. The price of a barrel is set at $42.
