• Reuters

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Falling oil prices have forced Iraq to scrap the draft 2015 budget it planned to present to parliament on Sunday, Prime Minister Haidar al-Abadi told lawmakers.

The budget had been based on a forecast oil price of $70 a barrel, but prices dropped to a four-year low below that level on Friday after OPEC’s decision not to cut production.

“Two days ago, the price of a barrel fell to $64,” Abadi said. “It may be a small difference, but the budget was originally very tight. With this fall, the budget was not possible in this form.”

He told parliament that the Cabinet had agreed to form a committee to look at drafting a new budget from scratch, focusing spending on absolute priorities, and would aim to present it to parliament in a week to 10 days.

Abadi said the oil price fall, coupled with disruption to production in Kirkuk this year, had had a devastating impact on revenues at a time when the government faces huge costs battling Islamic State fighters controlling much of north and west Iraq.

“Half the income has gone in one go,” he said.

Finance Minister Hoshyar Zebari told Reuters last week the original budget envisaged spending of over $100 billion. Abadi put the figure at 150 trillion Iraqi dinars ($125 billion).

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