Iraq's eighteen provinces are still struggling with their finances this year. In 2008 when the price of Iraqi crude was soaring, Iraq's budget increased with it. Iraq's governorates signed dozens of new development projects as a result. Few of those were finished however, so the bills rolled over into the new fiscal year. That coincided with a collapse in world oil prices with the recession. That means the new provincial councils elected in January 2009 are now faced with the outstanding obligations of their predecessors, leaving little to no funds for their own plans.
In 2008 Iraq's parliament passed a $49.9 billion budget. Later in the year a supplemental budget was added to that for a total of $72.2 billion. That was a post-war high, and almost equal to the 2007 $41 billion and 2006 $34 billion budgets combined. Flush with money, Iraq's provincial councils went out and signed a large number of reconstruction contracts. 2008 was an election year with balloting due at the beginning of 2009, so many politicians wanted to show that they were doing something to get re-elected. At the end of the year, the world economy collapsed and so did the price of petroleum. As a result Iraq's 2009 budget was reduced to $58.6 billion even though parliament knew that amount would cause a deficit. Again, campaign politics probably played a role in that decision.
All of Iraq's eighteen provinces had their budgets cut this year. In 2008, the governorates got a total of $5,861.3 million for their capital budgets that goes towards infrastructure and investment. For 2009 they are scheduled to receive $4,113.1 million, a $1,748.2 million decrease.
Capital Budgets By Province
Note: The Special Inspector General for Iraq Reconstruction (SIGIR) gave several different numbers for the 2008 capital budgets for the provinces and the amount spent. The latest figures provided by the SIGIR from a January 30, 2009 report were the ones used.
Not only that, but the incoming provincial councils found that their predecessors' spending left them with nothing. In Dhi Qar for example, 600 projects had to be put on hold because there was no money for them. Sometimes these deals were very questionable. The head of the reconstruction committee in Qadisiyah recently reported that the previous council issued $43 million in frivolous contracts tied up with tribal politics, corruption, and political favors. As reported before, many members of the former provincial governments are being charged with corruption since the January election.
Even without those problems, Iraq's provinces have had a very hard time spending all of their money. Last year, Najaf did the best spending 95% of its $143.33 million capital budget, while Ninewa, one of the most violent areas of the country, only spent 7% of its $356.67 million capital budget. Those numbers only tell part of the story however, as provinces that expended a lot like Maysan did not spend it well. For 2008 they spent 79% of their capital budget, but that only completed 41 of 241 projects. Some of the causes of these difficulties are lack of capacity, lack of trained staff, inexperience, and corruption. With many brand new politicians taking office it's likely that these issues will continue.
Aswat al-Iraq, "41 out of 241 projects implemented in Missan," 12/30/08
- "Diwaniya previous Council proscribed $43 million," 8/26/09
- "ID75bn in supplementary budget for Thi-Qar," 7/26/09
Department of Defense, "Measuring Stability and Security in Iraq," June 2009
Special Inspector General for Iraq Reconstruction, "Quarterly and Semiannual Report to the United States Congress," 7/30/08
- "Quarterly Report and Semiannual Report to the United States Congress," 1/30/09
- "Quarterly Report and Semiannual Report to the United States Congress," 7/30/09