Iraq Cabinet approves $100bn budget

Iraq's Cabinet approved a draft 2012 budget of 117 trillion Iraqi dinars ($100 billion) with a deficit of 17 trillion dinars ($14.5 billion), Iraq's cabinet secretary said on Monday.The 2012 budget, which still needs parliamentary approval, is based on an oil price of $85 a barrel and oil exports of 2.625 million barrels a day next year, Cabinet Secretary Ali Al-Alaq, a top aide to Prime Minister Nuri Al-Maliki, told Reuters. The new budget forecasts total government expenditure at $68 billion, including $31.6 billion set for investment spending in 2012, Al-Alaq said in an interview. "The cabinet approved the budget today ... It will be sent to parliament in the next two or three days."  The projected oil exports include 175,000 bpd from the semi-autonomous region of Kurdistan, he said. The OPEC member, which is trying to rebuild its battered economy after years of war and sanctions, depends mainly on oil revenue which funds about 95 percent of its budget.Baghdad has signed a series of deals with international oil companies in a bid to boost its oil production capacity to 12 million barrels per day by 2017 from 2.95 million bpd. That could vault Iraq into the top echelon of producers. But many analysts have been skeptical that Iraq would reach its ambitious target due to infrastructure constraints. Iraqi Oil Minister Abdul-Kareem Luaibi said in September a production capacity target of 8-8.5 million bpd was "more suitable". Al-Alaq said the 2012 deficit of $14.5 billion will be mainly covered by the surplus of the Development Fund of Iraq (DFI) account at the New York Federal Reserve. The DFI was established after the 2003 US-led invasion of Iraq in order to direct oil revenue to reconstruction and food programs for the Iraqis. Iraq holds the bulk of proceeds from its oil export sales in the DFI "We have a surplus in the DFI, it will cover the main part of this deficit ... We have agreed with the IMF to use around $10 billion from the fund," Al-Alaq said. Iraq's 2011 budget was $82.6 billion, based on an average oil price of $76.50 per barrel and 2.2 million bpd in crude exports. In November, Iraq oil exports were 2.135 million bpd.