Trends of financial allocations for The Kurdistan Regional Government of The Iraq federal budget

The imbalance in Iraq's federal budget after 2003 was mostly an estimated not a real deficit. The real deficit is the actual or nominal deficit adjusted for inflation's effect on the debt. In particular the real deficit equals the nominal deficit minus the inflation rate time the total debt in a given year. The significant escalation in public revenues as a result of the increase in oil prices and exported quantities exceeded estimates. Consequently, the accumulation of foreign reserves increased. Another reason for reducing or eliminating the deficit in the budget could be the incomplete implementation of the public expenditures because of the poor execution and delay in approving the budget. That ultimately led to a surplus in the general budget and foreign reserves. Thus, it can state that the deficit in the public budget caused by lower oil revenues and the increase in public expenditures. The allocation of a fixed share of 17% of the federal budget to the Kurdistan Regional Government led to tremendous economic development during the period from 2003 to 2014. However, from 2014 to 2018, the federal government cut (stopped sending) Kurdistan's allocation from the federal budget, which affected negatively on the region's economic growth. This study aims to clarify the operational and investment allocations for federal budgets and elucidate the operational and investment assignments to the Kurdistan Regional Government. Also, it seeks to identify the feasibility of the Kurdistan Regional Government's commitment to the federal budget law. Furthermore, it evaluates the negative and positive impacts of the lack of responsibility of the Kurdistan regional government to abide by the federal budget law. Iraq and the Kurdistan Region are the central areas of the study, and the first period is from 2006 to 2018. The most relevant results that this study came up are the followings: 1. The oil sector is the primary source of the financial funding of the federal budget and also in attracting foreign currency to assist in advancing economic development. Oil revenues were (42287900) million dinars in the (2006) and increased to (77160392.64) million dinars in 2018). That is because: (A) The Iraqi economy relies on the oil sector to finance the federal budget. (B) The drop in the price of oil in 2016 was because of the emergence of shale oil. (C) OPEC's insistence on the same amount of production for maintaining its hare in the world oil market. 2. While the contribution of investment expenditure reached 18.19% in (2006), it increased to %23.56 in 2018. Even though these proportions in the investment agreement, there is no tangible presence on the ground of prosperity and development. That indicates that there is a waste in the money allocated for investment and not being implemented. As a result of financial and administrative corruption. 3. The regional government abides the federal budget law from 2006 to 2013, which led to the development of the infrastructure and services to the residence of the region and increased economic well-being. However, Kurdistan's government did not abide by the law of the federal budget from 2014 to 2018. That resulted in the loss of expenditure investment (21934640.89 million) and the paralysis of thousands of investment projects in the region. According to the results of the study, the following recommendations made:- 1 - Cleansing the state agencies, even at a high level, from corruption and mischief in Iraq and the Kurdistan region. Avoiding, ultimately, all forms of nepotism in executing small and enormous projects. Improving the managerial performance of the entire state agencies and enhancing their abilities. Encouraging the spirit of transparency and accountability for achieving the principle of equal opportunities and respecting the law. That is all to maintain public and private money. 2- Decreasing the spending at the expense of the operational budget in Iraq and the Kurdistan Region. Increasing the expenditure at the expense of the investment budget because it contributes really to achieving economic development. 3- Diversifying the sources of public revenues, particularly tax revenues, finding an effective tax system in Iraq and the Kurdistan region. 4- the responsibility of all the minister in ninth Cabinet to head towards the agreement with the federal government for ensuring public expenditure (operational expenditure and investment expenditure) General Budget, Public Expenditure, Iraqi Economy, Total Revenues. Keywords: