Iraq's Finance Ministry forwarded to the cabinet the new 2016 draft budget, setting IQD113.5tn ($100bn) in spending and forecasting an IQD29.4tn deficit, according to a statement on the ministry’s website. The 2015 state budget envisaged IQD119tn in spending and IQD25tn budget gap.
The new budget forecasts an oil price of $45 per barrel, which remains below the current market prices, meaning the deficit would likely come lower than expected for 2016 as oil prices are set to slightly recover. The 2015 state budget assumed a $56 a barrel oil price.
Capital spending is seen at IQD30.4tn in 2016 while current expenditures are projected at IQD83tn.
Total revenue for 2016 is seen at IQD84.1tn, split between IQD69.8tn hydrocarbons windfall (83.3% of the total) and IQD14.3tn from non-hydrocarbon income.
The forecast 2016 budget deficit will be financed with domestic and external borrowing, the ministry noted.
The oil rich country plans to borrow $6bn from international investors to help bridge the budget gap. Iraq will likely issue the first tranche of $2bn bonds in the coming days, in the first offering since 2006. Citigroup, Deutsche Bank and JP Morgan Chase will jointly arrange the fundraising.
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