Iraq's reliance on oil raises concerns as 96% of the federal budget derived from petroleum revenues

Shafaq News/ Oil contributed to astounding 96% of Iraq's budget in February 2023, data released by the Iraqi ministry of finance said on Sunday.

The February financial report reveals that Iraq's total revenues, excluding transfer revenues, amounted to 17,668,982,693,586 Iraqi dinars. The predominant contributor to this revenue was oil, which generated 19,207,539,763,376 Iraqi dinars. In stark contrast, non-oil revenues accounted for a mere 695,072,665,000 dinars.

Mudher Mohammed Saleh, the Prime Minister's financial advisor, said that a spectrum of historical factors, including wars, sanctions, and ongoing political conflicts, have ultimately culminated in the misallocation of economic resources, raising alarms for a concerted effort to diversify Iraq's economy.

Iraq's unwavering reliance on oil as its primary revenue source exposes the country to the vicissitudes of global crises that impact oil prices, thus posing significant risks to the national economy. Iraq often resorts to external or internal borrowing to cover budget deficits, highlighting the nation's incapacity to effectively manage state funds and its failure to devise alternative financing solutions.

Economic analysts strongly advocate for the Iraqi government to diversify its income sources and invest in sustainable development initiatives, in order to mitigate the risks associated with the country's dependence on oil revenues. By reducing its reliance on petroleum, Iraq could foster greater economic stability and resilience in the face of unpredictable global market shifts.