Iraq says oil exports drop worsens budget outlook

By Suleiman al-Khalidi

AMMAN (Reuters) - Iraq's budget deficit could soar to $25 bln (17.2 billion pounds) this year if oil exports stay at their current low levels, prompting the government to consider new taxes and import duties to bolster revenues, the finance minister said.

Bayan Jabor said the concerns about state finances stemmed from oil exports that averaged 1.8 million bpd in the first quarter of 2009, at least 200,000 bpd below the target set in 2009 budget.

"The only problem we now face which efforts must be exerted to solve is the drop in exports below the two million bpd factored in the 2009 budget," Jabor told Reuters in the Jordanian capital of Amman.

The drop in global oil prices from a high of $147 per barrel last summer to close to $48 now has slashed Iraq's income from oil exports, its main source of revenues, just when it desperately needs money to rebuild after years of war.

The 2009 budget has already been cut twice, from an initial $80 billion to $58.6 billion by a parliament that says the government is squandering money on luxuries and salaries of senior officials.

"Our deficit is around $17 billion but if this drop in oil prices and exports continues, the 2009 deficit would rise to $25 bln and this will impact negatively the economy," Jabor added.

But the last version was still dependent on an average oil price of $50 per barrel, above current market rates.

Growth estimates for Iraq, a country with the world's third biggest reserves of crude, are now down to 4.5 percent in 2009 from a previous 8 percent, Jabor added.