Posted by
Randy P. Wright on Monday, December 15, 2008 12:09:53 PM
Iraq's finance minister warned Friday that he will make more
cuts in government spending next year and urged ministries to curb
expenses to offset the effects of the drop in world oil
prices.
Iraq depends on oil revenues for more than 90
percent of its budget. On Friday, oil prices fell below $45 a barrel -
down from a peak of more than $147 a barrel last
summer.
Finance Minister Bayan Jabr said in a
statement that the Finance Ministry will reconsider the budget in early
2009 and order austerity measures if necessary to make up for the
revenue shortfall.
Last month, the Iraqi government
adopted a revised 2009 budget of $68.6 billion. The original budget for
next year was $79 billion. Revenues are based on an oil price of $62.50
per barrel, down from an original estimate of $80.
He
said that the ministry is watching the falling oil prices carefully and
would take measures next year to "revise the budget and scale down
unnecessary expenditure as a way to ensure the continuity of the
economy."
Such moves would impact on the government's
stumbling reconstruction efforts aimed at rebuilding the country's
crumbling infrastructure - especially energy, electricity and oil
facilities.
Earlier this year, Jabr said that about
$15 billion of the 2009 budget had been earmarked for
reconstruction.
"We call on all ministries and local
governments to continue reconstruction, but at the same time reducing
expenditures and cutting down any unnecessary expenses," Jabr said in
the statement.
Talk of cutbacks and austerity is a
strong setback to optimistic forecasts for the Iraqi economy last
summer where oil prices were soaring.