Dropping Oil Prices Forces Iraq To Slash $15 Billion From 2009 Budget

Baghdad, Iraq (AHN) - Iraq's Ministry of Finance has planned to cut down around 25 percent from its 2009 budget as the country deals with the declining oil prices.

The country is expected to slash down as much as $15 billion to support the construction of Iraq's infrastructure, electricity, energy and defense sectors.

The current estimated spending on capital projects is up from $13 billion set aside for 2008 budget.

Under the revised budget draft, Iraq's spending program amounts to around $67 billion, which is based on oil price of $62.50 a barrel in the international market.

On July 11, oil hit a record high price of $147.27 a barrel and since then crude rates have declined more than 50 percent in the month of October amid deepening credit crisis across the globe.

According to Iraqi Finance Minister Bayan Jabr, the original budget proposal stood at $80 billion in spending, based on oil prices of $80 a barrel.

In 2007, the country's budget was around $70 billion, including $22 billion in additional funding that was approved earlier this year.

Iraq generates 90 percent of its total revenue from oil sales and the authorities in the country have engaged in improving security conditions along with economic development as the region slowly gains independence.

Wasit Province is the thirteenth region that was recently transferred to the Government of Iraq security control, which amounts to more than two-thirds of the country's provinces that have assumed security responsibility.

A light sweet crude barrel for December delivery moved up by $1.85 to $67.81 a barrel on the New York Mercantile Exchange trading on Friday. Recently, the price was down to as much as $63.12 a barrel in the last 10 days.