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Interview: Transparency and Surpluses in Iraq's Oil-Dependent Budget

Council on Foreign Relations

Interviewee: Joseph A. Christoff, Director of International Affairs and Trade, U.S. Government Accountability Office
Interviewer: Greg Bruno, Staff Writer, CFR.org

October 28, 2008

Joseph A. Christoff, director of the international affairs and trade division for the U.S. Government Accountability Office, which has audited Iraq's finances, says Iraq has weathered low oil prices in the past and and is likely to do the same now. "Oil prices back in the 2005 were $43 a barrel and Iraq still ended up with a surplus at the end of that year," Christoff says. "Now you have oil prices that have declined to about $65 per barrel, but Iraq generated a heck of a lot of money in the first eight months of the year; it's still going to have a chunk of change at the end of this year to hopefully begin investing in its own infrastructure."

In a previous interview with CFR.org, Iraq's Minister of Finance Bayan Jabr Solagh said Iraq has no surplus of funds. But Christoff says the GAO's August 2008 analysis found the opposite. "Iraq has a lot of money available for its day-to-day operations that exclude the foreign exchange reserves." The GAO says Iraq spent just 14 percent of the money it allocated from 2005 to 2007 on roads, bridges, vehicles, and other critical infrastructure. Christoff says a lack of skilled workers and a reluctance to spend their own capital while U.S. dollars circulate have contributed to the budgetary inertia.

Can you give a bit of an overview of Iraq's budget, how the bulk of it is generated, and what's happened to Iraqi revenues in the last two to three years?

One of the unique qualities of Iraq's budget is over 90 percent of Iraq's revenues that it generates each year come from the oil sector, so it's heavily dependent on the oil sector as the means by which it has money to spend.

Read the rest of this article on the cfr.org website.

Copyright 2008 by the Council on Foreign Relations. This material is republished on GlobalSecurity.org with specific permission from the cfr.org. Reprint and republication queries for this article should be directed to cfr.org.