Iraq’s government is so ill-equipped to handle the basics of finance that it is having trouble spending tens of billions of dollars that high oil prices are pumping into its coffers, the Wall Street Journal reported Monday.
In 2006, the Iraqi government spent just 22 percent of its $6 billion capital budget to improve Iraq’s roads, hospitals and schools, while the oil ministry spent less than 3 percent of its reconstruction money. In 2007, Iraq’s official expenditure reports show ministries had spent 7 percent of their $10 billion capital budget as of November; officials estimate the final figure will be at least 50 percent, the paper reported.
Baghdad’s coffers are swelling, the paper noted: In three years, the country’s foreign-exchange reserves have more than tripled, to more than $22 billion. Iraq also has more than $8 billion in bank accounts in New York and Iraq reflecting unused funds from oil-export sales. This is in addition to unspent budget funds.
The country has no system for electronic transfers of cash and few officials trained in basic budget procedures. Many budget writers list expenditures and receipts by hand, on neatly lined columns drawn out with a ruler, according to the Wall Street Journal.
Iraq’s swelling surplus is intensifying the already enormous pressure on Baghdad’s weak government, the paper reported: If officials can improve or restore basic services quickly, they may be able to convince Iraqis and international observers that the country is on the road to recovery. But if delays continue, U.S. and Iraqi officials warn that desperate Iraqis may turn to crime or the insurgency to earn money, plunging the country back into a cycle of brutal violence.