Iraq’s budgetary practices post US invasion: a critical evaluation

Although the steep decline in oil prices has inflicted havoc on Iraq’s public finances, critical analyses of the budgetary decisions and processes post-US invasion have uncovered other factors that have impeded Iraq’s economic progress. The authors evaluate Iraq’s budgets for the period 2003 through 2012 from three perspectives: legislative framework, revenue and expenditure, and monitoring. One of their primary findings is that Iraq has been operating at a surplus in excess of $85 billion. This finding contradicts officials who claim that Iraq has been operating at a large deficit. The authors explain why Iraq’s current budgetary practices of preparing, ratifying, executing and monitoring the country’s federal budget is fundamentally deficient, and much work is needed to reform its public financial management (PFM) system to bring it up to best international practices.For Iraq to succeed in its fight against corruption, its government should reform the country’s broken public finance management (PFM) system. The government must cut and control the parts of Iraq’s budget that prone to corruption, such as salaries and subsidies, and invest more in its infrastructure. It also needs to empower the financial monitoring function by eliminating the inspector general offices and the Commission of Integrity and to fully empower its oldest monitoring agency, the Board of Supreme Audit.