* Parliament cuts 2009 spending plan by 7 percent
* Lawmakers defy government plea to passed budget unchanged
(Adds lawmaker, central banker comments, paras 10-16)
By Ahmed Rasheed
BAGHDAD, March 5 Iraq's parliament defied
government objections and voted on Thursday to cut the
oil-dependent country's 2009 budget by $4.2 billion, or nearly 7
percent, due to slumping oil prices, a lawmaker said.
The drop in global oil prices from a high of $147 per barrel
last summer to close to $40 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 action by parliament would reduce the proposed gap
between income and spending this year to 27 percent of total
spending from 32 percent previously, said lawmaker Sami
al-Atrushi, a member of parliament's finance committee.
"I think this budget is acting firmly in dealing with
falling oil prices," said Atrushi, a Kurdish parliamentarian.
"Now the government will be committed to acting in
accordance with this vote and the finance ministry will have to
find ways to accommodate the new budget." He said the new budget
set spending at $58.6 billion at current exchange rates.
Dependent on oil exports for more than 95 percent of its
revenues, the Iraqi government is being starved of funds just as
the violence unleashed by the 2003 U.S.-led invasion begins to
die down and hopes grow for investment and economic growth.
If the government fails to restore services, equip its armed
forces and improve the lives of Iraq's 28 million people, there
could be a resurgence in bloodshed, some analysts warn.
Finance Minister Bayan Jabor on Wednesday tried to persuade
legislators to pass the budget as it was. They could review
spending in June if oil prices remained depressed, he said.
But lawmakers say the government is squandering money and
budget cuts can be made without affecting investment spending.
Some may be interested in trying to shackle Prime Minister
Nuri al-Maliki ahead of national elections late in the year,
after the success that allies of the once obscure but
increasingly assertive leader scored in recent local polls.
"These blocs were unhappy with the results achieved by
Maliki's list during the last provincial elections," said a
lawmaker from Maliki's Dawa Party, asking not to be identified.
"They want to handicap the government," he said. Reducing
its funds would be one way to do that.
The 2009 budget has already been cut twice, from an initial
$80 billion. But the last version was still dependent on an
average oil price of $50 per barrel, above current market rates.
Sinan al-Shibibi, governor of Iraq's central bank, said in
an interview a day before the vote that the slump in oil revenue
would force the government to make more sober budget decisions.
"There will be a difficult transitional period, but it
should give us an idea of how to take a more realistic attitude
toward allocations and demands from the various sectors."
"Of course, this occurs at the wrong moment because of the
fact that Iraq actually needs to embark on huge projects and it
will affect that," he said.
Maliki has called on Iraq to reduce its dependency on oil,
but the government has few options for an immediate short-term
increase in revenues, as there is little taxation.
Iraq has the world's third biggest reserves of crude and is
seeking foreign investors for its antiquated oil infrastructure.
(Writing by Michael Christie; Editing by Ron Askew)