Budget allocations threaten projects in Iraqi governorates

Shafaq News/ Iraqi lawmakers are warning that cuts to governorate allocations in the 2024 budget will harm public services and delay projects. They argue that the current budget is "unfair" to governorates and likely won't pass without changes, further delaying an already six-month late budget.

41 Trillion Dinars To Governorates In 2024 Budget

In June 2023, Parliament approved the Federal Budget Law for 2023-2025, totaling 197 trillion dinars, with a deficit of 63 trillion dinars, approximately one-third of the budget.

PM Mohammed Shia Al-Sudani revealed that the 2024 revenues are around 144 trillion and expenses are at 210 trillion, leaving a deficit of 63 trillion dinars.

Last Sunday, the Iraqi Cabinet approved the 2024 budget and sent it to Parliament for approval.

Iraq's Parliamentary Finance Committee began reviewing the 2024 federal budget on Wednesday, a day after receiving it from Acting Speaker Muhsen Al-Mandalawi.

The committee said it held its first meeting to plan a thorough review and analysis of the budget tables and items submitted by the Prime Minister's office.

Iraq's Ministry of Planning announced that more than 41 trillion dinars will be allocated to governorates in the 2024 budget. The ministry stated that regional development funds for governorates and investment spending for the Kurdistan region need to be compared more accurately.

In a statement, the ministry detailed that 15.875 trillion dinars from unspent 2023 funds and food security allocations will be added to the 2024 investment budget for governorates, which totals 3.103 trillion dinars.

The ministry also noted that 38.421 trillion dinars are allocated for federal projects in governorates, excluding the Kurdistan region. This brings the total available funds for governorates to 41.524 trillion dinars.

Defending the 2024 budget allocations to governorates against inaccurate comparisons with the investment spending for the Kurdistan region, the ministry stated that the correct contrast should be drawn between the total investment spending for governorates, which amounts to 41.524 trillion dinars, and the 4.875 trillion dinars allocated for Kurdistan. 

The ministry reiterated that the government remains committed to the allocated percentage for the Kurdistan region across all spending categories.

According to the ministry, unspent funds from previous years are recorded as trusts with the governorates or the Ministry of Finance, in line with the Tripartite Budget Law (2023-2025) and the Financial Management Law of 2019. 

Local governments can use these funds for projects following established procedures. These amounts are in addition to the 2024 budget allocations for governorates.

The ministry also highlighted additional funds for governorates from border crossing revenues and various development funds, including those for rebuilding Dhi Qar and Sinjar, supporting conflict-affected areas, and aiding the poorest regions, totaling about 2 trillion dinars.

Despite the large available funds, the ministry noted that governorates' spending capacity could be higher. In 2022, the highest spending did not exceed 4.2 trillion dinars. 

Given the substantial funds available, governorates are expected to utilize only about 30% of the budget due to their limited execution capacities.

The ministry reiterated Prime Minister Mohammed Shia al-Sudani's ongoing backing for local governments, ensuring they meet financial obligations and carry out key projects.

It noted that Parliament shifted 4.7 trillion dinars from electricity and oil ministries to governorate budgets in 2023. This added to the government's initial allocation of 5.2 trillion dinars, leading to borrowing and new provisions to cover the transferred funds, worsening the deficit.

Additionally, the ministry highlighted discrepancies in Kurdistan's allocations, including 2.7 trillion dinars earmarked for sovereign investments, which will only be released after a halt in oil exports. 

This pause comes after a Federal Court ruling. Funds for Kurdistan are contingent on the region resuming oil exports through SOMO (State Organization for Marketing of Oil) and handing over its oil revenues to the Ministry of Finance.

Budget Cuts Threaten Services

Hussein al-Saabri, a lawmaker from Babil governorate, warned that budget cuts would severely impact services and project completion."The budget allocations for governorates are problematic not just for Babil but for most Iraqi regions," al-Saabri told Shafaq News Agency. Reducing budgets will delay many projects, halt others, and deter contractors, among other issues," he cautioned. 

Al-Saabri, a member of the Parliamentary Committee on Investment and Development, added that lawmakers had hoped for a budget that would improve services, but the government's cuts will cause significant problems, especially in service delivery to citizens.

Lawmakers Highlight Unfairness Of Budget Cuts

"Cutting provincial budgets is a mistake," said Nineveh governorate lawmaker Mahma Khalil.

"The budget allocations for governorates are insufficient, and giving Nineveh only 11.5% of the budget is unfair," he told Shafaq News Agency.

Khalil stressed the need for more funds to rebuild Nineveh after terrorism and military damage. 

"The governorate needs over 60 trillion dinars, according to former Prime Minister Haider al-Abadi," he reminded.

Similarly, Noor Nafeh al-Jalihawi, a lawmaker from Al-Diwaniyah governorate, highlighted the drastic cut for her governorate. 

"Last year's budget allocated over 320 billion dinars to Al-Diwaniyah, but this year it's only 78 billion. We do not understand the government's reasoning and will not accept this reduction," he said.

Kurdistan's Budget Share Unchanged

Iraq's Parliamentary Finance Committee confirmed that Kurdistan's share of the 2024 federal budget remains the same as last year.

According to committee member Nermeen Maruf, discussions on the budget are ongoing, aiming for final approval soon.

Maruf told Shafaq News Agency that Kurdistan's portion of the 2024 budget remains at about 12.67% or roughly 20 trillion dinars.

PM Al-Sudani revealed that the 2024 budget allocated 62 trillion for employee salaries. In comparison, the salaries share was 59 trillion in the 2023 budget.