BAGHDAD (Reuters) - Iraq’s parliament gave final approval on Sunday to an $82.6 billion budget for 2011 based on an average oil price of $76.50 per barrel and 2.2 million barrels per day in crude exports.
The deficit was projected at $13.4 billion, although Iraqi officials have said the shortfall would be eliminated if world oil prices remain at current levels. About 95 percent of Iraq’s government budget comes from oil revenue.
Budget shortfalls challenge Iraq’s ability to rebuild after years of conflict following the 2003 U.S.-led invasion that ousted dictator Saddam Hussein.
The budget allocates $25.7 billion for investments. Iraqi officials have announced massive projects to build hundreds of thousands of new homes and to boost electricity generation.
Current power production is just 7,000 megawatts compared to demand of 12,000 megawatts. Iraq’s master plan for electricity says the sector needs $77 billion of investment by 2030.
The 2011 budget also allocates $2.05 billion to pay oil firms’ investment costs.
The OPEC producer has signed deals with global oil firms that could boost its output capacity to 8-12 million bpd, rivaling top producer Saudi Arabia, in about six years. Current production is 2.7 million bpd.
The budget foresees crude production of 100,000 bpd from Iraq’s semi-autonomous northern Kurdish region.
Iraqi Kurdistan began pumping oil again earlier this month after a halt of more than a year due to a dispute with the central government in Baghdad over contracts the region signed with foreign oil companies.
The Kurdish region had ramped up production to about 80,000 bpd by Friday, sources at Iraq’s North Oil Company told Reuters, but only about 50,000 bpd were being exported, with the rest feeding domestic refineries.
Passage of the budget was held up for months by political haggling.
Iraq has been hit by a series of protests in recent weeks, many aimed at pressuring the government to improve power and other basic services, and to alleviate food shortages.
Politicians have taken a number of steps to ease public anger. They diverted $900 million from the purchase of F-16 combat jets to the national food ration program, made big purchases of sugar and wheat to bolster rations, and proposed cutting lawmakers’ salaries by 50 percent.
Writing by Jim Loney; editing by Sophie Walker