Government adviser: Iraq is seeking to form a sovereign wealth fund, 25 DEC

 Government adviser: Iraq is seeking to form a sovereign wealth fund

The financial adviser to the Prime Minister, Mazhar Mohammed Saleh, confirmed Iraq’s quest to form a sovereign wealth fund.

Saleh told {Euphrates News}: “Iraq is seeking to form a sovereign wealth fund, especially after conflicts and wars were lost for less than half a century of time and the previous system played a major role in wasting the country’s resources and wealth, it turned the surplus underlying the current account of the balance of payments into a net deficit due to the deterioration of the national export sectors of the economy, especially the oil sector.”

Saleh pointed out that “the increase in external debt, in the past decades, as an alternative to the establishment of a sovereign fund for external wealth, which adopts oil rent surpluses, which can be invested in a diversified investment portfolio that provides its returns, the general budget of the state in general, the investment budget and according to the absorptive capacity in particular, similar to countries such as Norway, China, the Gulf countries and other countries of the world.”

Iraq has previous experience in establishing a sovereign wealth fund, through the establishment of the Iraqi Fund for Foreign Development, which was established under Law No. 77 of 1974, but then the work of this fund was limited to managing Iraq’s financial contributions to regional and international organizations and bodies, and there was an attempt to establish two sovereign funds for Iraq in 2018, but they remained without practical implementation.

The economies of countries in terms of the source of revenue are divided into 3 sections; economies with various revenue sources, economies with a single revenue source “one-basket economies”, and the third section is between them.

Iraq is part of the second group, as Iraq is one of the rent countries, due to its almost total dependence on revenues from the sale of crude oil, as oil revenues constitute more than “90 percent” of the total general budget revenues, and also contribute about “45-60 percent” of the composition of the gross domestic product.