Iraq’s Economy Is “Fragile”… “Shocking” International Figures, So What About Their Accuracy?
Reports Economy News With the impact of fluctuations in currency exchange rates and the reduction in oil production following the interruption of exports through the Turkish Kirkuk-Ceyhan oil pipeline, estimates indicate a contraction in the non-oil real GDP in Iraq by a high rate of up to 9% on an annual basis in the last quarter of this year. Compared to its counterpart in 2022, which means undermining the effects of growth achieved in the first three quarters of this year, according to estimates by the World Bank, which believes that the country’s economy has become “fragile”.
In this regard, the economist and financial expert Abd al-Rahman al-Shaikhli believes in statements to Al-Araby Al-Jadeed that the estimates of the World Bank are “shocking” because they contain true and certain information, and they sound the alarm for Iraq’s economic future, but he believes, at the same time, that they contain some “Exaggeration”.
For example, the figures announced in the bank’s latest reports indicate that the total public debt is equivalent to 76 billion dollars, distributed among 55 billion internal debts and 21 billion external debts, while the debts Iraq can pay easily, because it has a high domestic product, especially since Debt constitutes between 30% and 35% of oil production revenues only.
Al-Sheikhli also confirmed to Al-Araby Al-Jadeed that the Iraqi economy is “fragile,” as described by the World Bank report, due to dependence on oil resources and the worsening rentier situation, with the decline in other sources of resources in the public budget, which made the economy rentier par excellence, adding to that the lack of economic relationship.
The rationale between the volume of expenditures from financial allocations and the quantity and quality of the achievements achieved from government projects in light of corruption devouring huge amounts, with the low level of service and development achievements achieved within the framework of the annual budgets of the state, with the increase in the percentage of poverty and unemployment and the high volume of debt borne by the national economy, and all of these, In his opinion, reasons made the economy weak.
Commenting on the causes of fragility, political analyst Haidar al-Moussawi believes to The New Arab that the most prominent of them is the spread of financial corruption in all sectors of life, and the state’s tendency to rely entirely on the oil sector, which feeds 98% of the GDP and is considered the basis for the continuation of economic life, “attributing the economic deterioration to Poor management,
the lack of development and reform programs, effective economic plans, the absence of a real vision to raise the general level of the country, and the lack of solid tools that contribute to alleviating the burdens of citizens and the economy,
while “the governments have not taken any effective measures to revitalize the industrial and agricultural sectors to be synonymous with the energy sector,” thus avoiding the country from an economic disaster in the future.
A number of International Fund experts had met with Iraqi officials in Jordan between May 24 and 31, and they discussed economic developments and general policy plans for the country’s economy in the coming period, stressing at the conclusion of the meeting, in a detailed statement, that “the momentum of the growth of the Iraqi economy witnessed It has slowed down in recent months, after the country recovered last year to the pre-coronavirus situation.
The World Bank followed that occasion by asserting that “the Iraqi economy is fragile,” noting that the central bank’s auction caused the redirection of hard currency to the parallel market, which led to a decrease in the value of the dinar against the dollar, and thus led to a significant increase in food prices.
According to the World Bank report issued entitled “Iraq’s Recovery is in Danger” dated August 20, there are renewed pressures, “as it suffers from stagnant non-oil gross domestic product, industries and agricultural activities, accompanied by high inflation rates, while Iraq lacks under its government The current situation calls for wide-ranging structural reforms that will enhance its economy and diversify its public treasury revenues, rather than relying solely on oil.
In this context, the World Bank expressed its reservations about the recent general budget, as it criticized the large increase in the volume of public expenditures by 59% compared to the year 2022, representing 74.3% of total expenditures, which will lead to a large fiscal deficit of $ 39.7 billion, representing 14.3% of the volume of expenditures. General imports, more than half of the recent record reserves accumulated in the wake of the oil price boom.
According to a report issued by the “International Center for Development Studies” in London last Wednesday, Iraq loses annually at least $5 billion as a result of its import of oil derivatives despite having the second largest oil reserves in the “OPEC” organization, noting that Iraq has the capabilities to refine 1116 tons of oil. One million barrels per day, while its current production does not exceed 950,000 barrels, while the return of the Baiji refinery to work would raise refining capacity to 1,260 million barrels, which would meet the country’s consumer needs for petroleum products.
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