DINAR REVALUATION REPORT: Parliamentary Finance Committee's Visit to Erbil: A Focus on Non-Oil Revenues, 19 SEPT

 Parliamentary Finance Committee's Visit to Erbil: A Focus on Non-Oil Revenues

In September 2024, the Iraqi Parliamentary Finance Committee is scheduled to visit Erbil, the capital of the Kurdistan Region, to discuss non-oil revenues and other financial matters. 1  3  5

Background on Iraq's Fiscal Landscape

Iraq, heavily reliant on oil for its revenue, has been grappling with fiscal challenges and a need for economic diversification. 1 The country's ongoing efforts to modernize its financial and banking sectors and reduce dependence on oil have been hindered by political dynamics. 1 As of September 19, 2024, the Iraqi government faces a potential crisis due to plummeting oil prices, which could jeopardize its ambitious plans. 4

Recent Developments in Baghdad-Erbil Relations

The relationship between the federal government of Iraq and the Kurdistan Regional Government (KRG) has been tense, particularly over revenue-sharing disputes.  2The KRG has been accused of not meeting its obligations to hand over 400,000 barrels per day of crude production to the state marketer SOMO. 2 The dispute has been further complicated by Turkey's refusal to reopen its port of Ceyhan to Iraqi crude exports. 2

Non-Oil Revenues: A Strategic Focus

In light of the ongoing fiscal challenges and the need for economic diversification, the upcoming discussions between the Parliamentary Finance Committee and the KRG will likely focus on non-oil revenues. 3 These revenues are crucial for the sustainability of the Iraqi economy, especially given the volatility of oil prices. 4

The Role of Non-Oil Revenues in the Budget

Non-oil revenues, which include taxes, fees, and income from various sectors such as agriculture and tourism, play a vital role in the federal budget. 1 The 2024 budget, which was approved by the Iraqi government in March and sent to the legislature for voting, includes a record $152 billion in spending.  3 The budget originally allocated 12.6% of the spending to the Kurdistan Region. 3 However, the final numbers may have been adjusted during the voting process. 3

Challenges and Opportunities

The discussions between the Parliamentary Finance Committee and the KRG will address the challenges and opportunities associated with non-oil revenues. 3Economic experts have suggested that Iraq must implement serious plans to reduce imports, encourage the private sector, cut unnecessary expenditures, and increase non-oil revenues. 4