How Iraq’s new budget affects oil arrangement with Kurdistan region
The success of Iraq's largest-ever budget is partially dependent on oil prices, and follows the federal government asserting more control over the Kurdistan Region's oil sector.
Iraq’s passage of a federal budget this month could have significant ramifications for the country's oil sector as well as the autonomous Kurdistan region.
Iraq’s Council of Representatives, or parliament, passed a record $153 billion budget on June 12. The budget uniquely covers the years 2023 to 2025, includes sizable spending on development and infrastructure projects, and plans to add tens of thousands of public sector jobs. The budget was finally passed after months of political battles, involving tense debates over the oil revenue split between the federal government in Baghdad and the Kurdistan Regional Government (KRG).
For comparison, the 2021 budget amounted to $89 billion. Iraq did not pass a budget amid the political instability of 2022, prompting the government to pass emergency legislation to fund certain provisions.
The budget is based on an oil price of $70 per barrel and exports of 3.5 million barrels per day, including 400,000 barrels from the autonomous Kurdistan Region. It allocates 12.6% of federal funding to the KRG, according to reports.
