BAGHDAD: Iraq's parliament on Saturday (Mar 3) adopted an US$88.5 billion budget for 2018, with Kurdish lawmakers boycotting the vote to protest against a cut in the amount allocated to their autonomous region.
The reduction comes after a controversial independence reference by the Kurds last year sparked a furious dispute with the central government.
The budget is based on projected oil exports of 3.9 million barrels per day, including 250,000 bpd produced in the Kurdistan autonomous region of northern Iraq, at a price of US$46 per barrel.
It also projects US$77.5 billion (€63 billion) in revenues and a deficit of US$10.6 billion, and allocates US$20.8 billion for investments.
Kurdish lawmakers boycotted the vote because it reduced Kurdistan's part of the national budget from 17 per cent to 12.6 per cent.
Article 9 of the Iraqi constitution stipulates that Kurdistan's share of the budget must reflect the size of the population of the autonomous region.
But the text of the budget approved by parliament on Saturday states that the autonomous Kurdish government must export 250,000 bpd and hand over the money it earns from the sales to the federal authorities.
"If Kurdistan does not hand over (the money), the finance ministry will take it from its part of the budget," it said.
Iraqi Kurdish peshmerga forces took control of the northern province of Kirkuk, home to key oilfields, in June 2014 after federal forces withdrew in the face of an offensive by the Islamic State group.
Late last year, following the failed Kurdish referendum on independence rejected by Baghdad, federal forces recaptured the oilfields, severing a key lifeline for the Kurds whose economy largely depended on oil revenues.
Iraqi parliament speaker Salim Jubburi on Saturday said the 2018 budget had also "resolved" the issue of "salaries for Kurdish civil servants and the peshmerga".
The federal government will resume paying those salaries which had been frozen for the past six month amid demands by Baghdad for an audit to determine the number of civil servants in Kurdistan, he said.
The budget also contained some belt-tightening measures as Iraq looks to rebuild after the brutal fight against the Islamic State group.
It limits the number of cars that can be used for official convoys, including those escorting the president and the prime minister.
Dozens of cars used to escort government officials in Iraq, but under the new guidelines the president and the prime minister will be alloted just five vehicles each.
Government ministers will be allowed three-car convoys and vice presidents two.
Iraq will sell at auction all the other cars that made up official convoys and put the money earned back into the budget.
Iraq ranks as one of the world's most corrupt countries, coming 169th out of 180 in Transparency International's corruption perception index for 2017.
Its economy has suffered from low oil prices and the country is also reeling from a three-year war against militants.
The adoption of the new budget comes weeks after donors pledged US$30 billion in loans and investment for Iraq's reconstruction.
Iraq has said its 10-year reconstruction plan would cost US$88.2 billion, of which US$22 billion was required immediately.