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Wed 4 Mar 2009 12:48 AM

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Iraq parliament postpones budget vote

Lawmakers fail to agree on 2009 budget spending cuts - vote now due Thursday. 

Iraq's parliament on Tuesday put off an expected vote on the oil-dependent country's 2009 budget, and summoned the finance minister for talks on three proposals for possible cuts in the spending plans.The proposed spending cuts ranged from a trillion dinars, or less than $1 billion, to an overall 10 percent off the $62 billion budget as the collapse in oil prices erodes Iraq's main source of income.

"It's expected that the minister of finance will come to attend a meeting with the finance committee and heads of parliamentary blocs (on Wednesday), to discuss the possibilities for decreasing the budget," said Sami Atrushi, a member of parliament's finance committee.

"The vote has been postponed till Thursday," he added.

Dependent on oil exports for more than 90 percent of its income, the Iraqi government is struggling to find money to rebuild after the years of war and sectarian slaughter unleashed by the 2003 US-led invasion.

If it fails to boost broad-based growth and to re-establish essential services like electricity supply and sewage treatment, growing unemployment, crime and public frustration could lead to a resurgence in violence, some analysts and officials say.

Iraq has been forced to cut the 2009 budget twice already, from an initial $80 billion to $62 billion, as global oil prices slumped from a record high of $147 per barrel last summer.

But the latest version of the spending plans is still dependent on a potentially optimistic average oil price during the year of $50 per barrel. Crude prices are closer to $40 now.

Atrushi said the finance committee had decided to narrow down parliament's options on budget cuts to three choices.

The first called for a 10 percent reduction in the overall budget, or 7 trillion Iraqi dinars ($5.9 billion) in cuts.

The second option was for cuts in operational spending of 6-6.5 trillion Iraqi dinars but would leave investment spending untouched.

The third choice was to lop 10 percent off all spending by government ministries. That would result in total cuts of around 1 trillion Iraqi dinars, Atrushi said. (Reuters)