To remedy a dark future .. What should Iraq do to achieve economic recovery?
Baghdad – The specialized British Economist Intelligence magazine suggested that 5 economies – including Iraq – will not recover during the next year, but it will remain an attractive place for foreign investment interests to be active again; Provided that financial and economic plans and reforms are pursued.
Iraq’s general budget depends more than 95% on the financial revenues generated from the sale of black gold, as the volume of oil production is more than 4 million barrels per day, while the export volume is more than 3 million barrels per day, according to the Iraqi Ministry of Oil.
The Iraqi economy was subjected to a stifling financial financing crisis in the past two years due to the Corona pandemic and the deterioration of oil markets, which led the government at the time to reduce the exchange rate of the Iraqi dinar against the US dollar; In a move to finance financial expenditures, social obligations and public sector salaries.
declining growth rates
The Iraqi government’s advisor for economic affairs, Dr. Mazhar Muhammad Salih, said that the sharp decline in GDP growth rates last year from 9 to 10% was a major impact on the decline of the national economy, and came under the influence of two low rentier patterns that contributed to that decline.
Saleh identifies the two patterns during his speech to Al Jazeera Net; The first is the result of weak agricultural growth due to water scarcity, lack of rain and drought, which led to a decrease in the contribution of agriculture to the gross domestic product until Iraq turned into a net importer of foodstuffs from the neighboring countries.
While the second pattern – according to the economic advisor – was the deterioration of the oil sector’s contribution to the GDP and its decline by about half; Which he called the “double rentier blow” to the domestic product, that is, the blow to the decline in the contribution of “agriculture and oil” represented by the decline and deterioration of economic growth in addition to the closure of the global and local economy due to Corona, which caused an exacerbation of living life that put about 2.7 million new Iraqi families without a line poverty.
Despite the improvement in Iraqi oil revenues in recent months, which reached twice as much as last year, the indicators of growth in GDP, according to – the economic advisor – are still modest, close to only 1%, which indicates a slow annual growth that remains below the annual population growth rate of 2.6% , and will generate problems in the economic well-being and the fairness of income distribution among the population.
Saleh believed that working on the renaissance of the country’s economy for the year 2023 requires moving government investment to exploit natural resources, directing the proceeds of its returns to funds financing more than 50,000 companies suspended from work in the private sector, and strengthening them with modern and digital technology lines to achieve a boom in economic growth of no less than 5% , which represents almost double the population growth rates, and then the crawl for the desired target rate of growth at a rate of 7%.
Despite the various economic reforms that the current government has implemented, other reform trends and desires still have a long and unpaved road to implement due to the high rates of inflation and poverty, according to economic specialist Haider al-Rubaie.
Speaking to Al-Jazeera Net, Al-Rubaie believes that the reform “white paper” approved by the government represents an important turning point for the Iraqi economy in particular for its multiple investment, industrial and development aspects, as well as being a comprehensive roadmap aimed at reforming the Iraqi economy and addressing the serious challenges facing the country and accumulated over the past years. , due to corruption and lack of planning, in addition to the oil rent to finance state revenues.
In addition to the white paper, Al-Rubaie also stresses the need for the government to continue to implement more tax and customs reforms to increase the country’s financial revenues, in addition to diversifying state resources and empowering and supporting the private sector.
Corona and the economy
With the global fear of the continued emergence of new strains of Covid-19, the economist, Manaf Al-Sayegh, fears that the rentier economy will be rapidly exposed to frequent economic crises coinciding with these strains; Which leads to an increase in the unproductive consumption pattern.
Al-Sayegh told Al-Jazeera Net that Iraq would avoid the effects of the new dynasties through the oil sectoral lever in order to advance the national economy during the next five years, through partnership with the private sector, in addition to moving the file of the construction and reconstruction sector, which leads to creating real job opportunities and contributing to solving a crisis. Housing that burdens citizens who live on rent, and their monthly rent is about 400,000 dinars (275) in the lowest popular areas, and in other areas it rises to about 1200 dollars per month.
Al-Sayegh adds that the problem of the Iraqi economy – in addition to being political – is societal; The fact that the Iraqi individual has turned into a consumer and not a producer, stressing the need for an economic program to change human thinking in his lifestyle and social behavior, and to move away from all dependent and clan concepts that affect the public economy, he said.
economics and politics
The Executive Director and Head of Research at the Policy-Making Forum in London, Dr. Rana Khaled, links the association of the Iraqi economy’s recovery from the pandemic with the ability of political leaders to achieve political consensus.
She told Al Jazeera Net that the political signs are still weak in this direction, suggesting that Iraq will suffer heavy losses if the file of political stability and its direct impact on the national economy is not addressed.
She added that the major economies at the G20 summit pledged not to be lenient with fragile governments that are not committed to comprehensive economic development, which puts Iraq isolated from international support and facilitation unless it decides on serious economic reforms.