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.

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.

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 a lot of money is being squandered by government entities and the budget cuts can be implemented without affecting investment spending.

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.

Prime Minister Nuri al-Maliki has called on Iraq to find ways 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 largely antiquated and dilapidated oil infrastructure.


Reuters

Güncelleme Tarihi: 05 Mart 2009, 20:24