Iraq's cabinet approves 2021 draft budget of $103 billion

BAGHDAD (Reuters) -Iraq’s cabinet on Monday approved a 2021 draft budget of 150 trillion Iraqi dinars ($103 billion) as the country wrestles with an economic and financial crisis due to low crude prices.

The budget deficit would be estimated at 63 trillion dinars ($43 billion), two government sources said.

The draft 2021 budget is based on a world oil price of $42 a barrel and expected oil exports of 3.25 million barrels per day (bpd), including 250,000 bpd from the Kurdish region, the officials said.

But despite approval of the budget, which should be referred to parliament for final approval, disputes between the central government and semi-autonomous Kurdish region are still unresolved, a government senior economic advisor said.

“Differences between Baghdad and Kurdish delegates are still persisting over Kurdish oil exports and the region’s debts. It’s too complicated for now to reach an agreement,” said a senior government advisor.

Hit by squeezed revenues, Iraq’s central bank on Saturday increased the sale price of U.S. dollars to banks and currency exchanges to 1,460 dinars, from 1,182 dinars, seeking to close the gap of widened 2021 budget inflation after a collapse in global oil prices, a major source of Iraq’s financial resources.

The finance ministry supplies the central bank with dollars based on a price of 1,450 dinars against the dollar, Central Bank chief Mustafa Ghalib said in a statement.

Iraq has the world’s fourth-largest oil reserves and depends on oil revenues to fund 95 percent of its national budget.

($1 = 1.45 Iraqi dinars)

Reporting by Ahmed Rasheed; editing by David Evans and Angus MacSwan