Falling oil prices have Iraq teetering

Some Iraqi officials refer to it as “the gap,” and it is becoming as pressing a concern as the fight against the Islamic State.

Each month, Iraq’s government pays out nearly $4 billion in salaries and pensions to the military and a bloated array of public sector workers. But with more than 90 percent of government revenue coming from oil, it is bringing in only about half that as crude prices plunge.

With the state facing the prospect of bankruptcy, Prime Minister Haider al Abadi is trying to address corruption and boost government income in sometimes unpopular ways.

But Abadi says the government has to make money where it can. Iraq has predicted a budget deficit of about $25 billion this year, but that was based on an oil price of $45 a barrel. The shortfall could be double that, Salih said.

To cope in the short term, Iraq is dipping into its foreign reserves, saying it expects them to fall to about $43 billion this year from $59 billion in October.

Iraq is seeking more financing from the International Monetary Fund after receiving a $1.24 billion emergency loan last year. The United States is offering a $2.7 billion loan for military spending, and Germany has lent the country just over $550 million for reconstruction