The International Monetary Fund (IMF) on Sunday (March 3, 2024) recommended that Iraq reduce dependence on oil, work to increase non-oil revenues and control public spending, in order to ensure the continuation of economic reforms and achieve sustainable growth.
The final statement of the Fund’s experts at the end of the 2024 Article IV consultation mission noted that “Iraq is expected to continue economic growth due to the expansion of public finances,” but warned of “a significant increase in exposures to oil price fluctuations in the medium term.”
“Greater declines in oil prices or extension of OPEC+ reductions may affect Iraq’s financial and external accounts,” the IMF said, noting that “the risks of escalating regional tensions and their potential impact in the event of a disruption of shipping routes or damage to oil infrastructure, leading to losses in oil production that exceed the potential positive impact of a rise in oil prices.”
He added that “Iraq needs to increase non-oil exports and government revenues, and reduce the economy’s exposure to oil price shocks.”
“Iraq needs higher and more sustainable growth in the non-oil sector to accommodate a fast-growing workforce,” the statement said.
“The growth of the non-oil sector in Iraq rebounded strongly in 2023, as estimates indicate that Iraq’s real non-oil GDP growth is 6 percent in 2023 after growth stalled in 2022,” the IMF statement noted.
