BAGHDAD (AP) -- Iraq's Cabinet has approved next year's budget of about $91 billion, sending it to parliament for final approval, a government spokesman said Monday.
Spokesman Saad al-Hadithi told The Associated Press the budget of 106 trillion Iraqi dinars (about $91 billion) will run with a deficit of 23 trillion dinars ($19.72 billion). Al-Hadithi added that the deficit will be relieved through loans from local and international lenders.
He said the budget calculations are based on an assumed oil price of $45 a barrel with an average daily crude oil output of 3.6 million barrels.
"The budget is realistic and was built on reducing public expenditures to face security and economy challenges," he said, adding that it sets priorities ranging from spending on government forces and paramilitary troops to government-run social benefits and the agricultural sector.
Iraq holds the world's fourth largest oil reserves, some 143.1 billion barrels, and oil revenues make up nearly 95 percent of its budget. Like other oil-reliant countries, Iraq's economy has suffered due to plummeting oil prices since last year.
The country's 2015 budget stands at nearly 119.6 trillion Iraqi dinars (about $102.5 billion) and runs with a deficit of 25 trillion dinars (about $21.4 billion). It is based on an expected price of $56 per barrel with a daily export capacity of 3.3 million barrels.
The country has been plunged into crisis since summer 2014 when the extremist Islamic State group swept across the north and west, seizing vast swaths of territory including Iraq's second largest city Mosul. Government forces, Kurdish fighters and Shiite and Sunni militias have since regained some of that territory with the help of U.S.-led coalition airstrikes.
Reeling from the IS advance, Iraq's government introduced austerity measures earlier this year --- eliminating government posts, merging some ministries, halting spending on construction projects and imposing new taxes to pay for civil servants and fund its military. It also planned to issue bonds worth $7 billion --- $5 billion in international bonds and $2 billion for domestic banks --- to narrow the deficit. The country also secured $1.7 billion in loans from the World Bank and a $833-million loan from the International Monetary Fund.
The harsh economic situation also forced Iraq to revive a long-delayed plan to redenominate the Iraqi dinar by knocking three zeroes off the nominal value of its banknotes. The plan is set now to be implemented by 2017, including a restructuring of the dinar by issuing two large banknotes --- a 50,000 dinar note before the end of this year and 100,000 dinar banknote next year --- and canceling smaller denominations.
Despite hundreds of billions in oil revenues and international aid since the 2003, Iraqis still suffer from shabby public services and a weak economy due to endemic corruption and poor financial management, as many senior appointments are determined by party patronage and sectarian loyalties.