BAGHDAD -- Iraqi lawmakers Wednesday passed a crucial bill allowing the country to finance a widening fiscal deficit amid an unprecedented economic crisis spurred by falling oil prices and the pandemic.
Iraq depends on oil exports to fund the lion's share of it's state expenditures, including a bloated public wage bill. But month-to-month earnings have been half of what the government had projected to fund the 2020 budget as oil prices hover between $20-$30.
The bill's passage was necessary to enable the government to request loans both internally and through international monetary agencies because the 2020 budget was not passed due to political deadlock.
“(The law) prevents the government from taking loans without prior approval from the Council of Representatives,” said Kurdish lawmaker Sarkawt Shamseddine, explaining why the vote was necessary.
The government is in talks with the International Monetary Fund, but to qualify for budgetary support Iraq will have to initiate major reforms. A recent move to cut public sector salaries and pensions was rejected by lawmakers in a major blow to the government's reform efforts.