Government advisor indicates significant growth in non-oil GDP in 2024
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed today, Saturday, that the growth rates of the non-oil gross domestic product will rise in an unprecedented manner during the year 2024, while indicating that the government program has succeeded in controlling financial diversity in the general budget and the national economy in general.
Saleh told the official agency that “the high growth rates of non-oil GDP were accompanied by an important role for monetary policy and its role in regulating the monetary sector under Central Bank Law No. 56 of 2004,” adding that “this monetary policy is sound and has not strayed from the circle of consultation and cooperation with the fiscal policy and the government economy, which still dominates 65% of GDP and 98% of foreign exchange flows.”
He pointed out that “the financial sector contributed, through the dissemination of some developmental government borrowing tools, and the sources of formation of those foreign reserves from oil revenues, to building the monetary base, and then building the money supply in the country.”
The Prime Minister’s financial advisor expected “the continuation of the calm approach to financial policy during 2025, which contributed to deepening the circle of consultation and close cooperation with the Central Bank and its monetary policy in regulating the liquidity of the general budget and the stability of the macroeconomy without intersection or isolation,” noting that “this matter enhanced the success of the country’s economic policy during 2024 in international and regional circumstances that were extremely complex.”
Iraqi Central Bank sales exceed $1 billion in 4 days
The Central Bank of Iraq’s sales of hard currency during the past week amounted to more than one billion US dollars, as it opened the auction to sell the dollar in the local market.
Shafaq News Agency correspondent reported that the Central Bank sold, during the four days of the auction, one billion, 168 million, 534 thousand, and 738 dollars, at a daily rate of 292 million, 133 thousand, and 684 dollars, an increase from the previous week, when the daily rate reached 291 million, 196 thousand, and 182 dollars.
Monday’s sales topped the list with the highest sales, reaching $298,344,336, while Thursday’s sales were the lowest, recording $283,484,126.
Our correspondent pointed out that foreign remittance sales during the past week amounted to 1 billion, 91 million, 984 thousand, and 738 dollars, compared to cash sales that amounted to 76 million, 550 thousand dollars.
The bank opened its auction last week over four days: Sunday, Monday, Tuesday, and Thursday.
2024 ended without what was planned.. Will Iraq succeed in escaping the “oil curse”?
Iraq witnessed a significant increase in non-oil revenues at the end of last year 2024, as it reached 12% of total public revenues compared to non-oil revenues for the year 2023, while economic experts believe that this number is less than the planned target within the government’s plans.
In this regard, economic expert Nabil Al-Marsoumi told Shafaq News Agency, “The total non-oil revenues achieved in Iraq until last October amounted to 14.438 trillion dinars, representing 12% of total public revenues, compared to 7% in 2023,” noting that “the plan was to achieve 27 trillion dinars in non-oil revenues, representing 20% of public revenues, as Iraq was supposed to achieve non-oil revenues for the year 2024 worth 27 trillion, and this number has not been achieved so far, and almost half of it has been achieved.”
He stressed that “Al-Sudani’s plan is to achieve non-oil revenues of 20% of public revenues, which has not been achieved either, as only 12% has been achieved so far, slightly exceeding half,” indicating that “the increase in the percentage of non-oil revenues, which consists of fees, taxes, profits of public companies, and other financial matters, is important to the Iraqi economy and lies in getting rid of the dependence on oil revenues.”
Al-Marsoumi continued, “The importance of Iraq reaching the 20% rate that Al-Sudani called for is to make Iraq not rely on oil revenues because they are volatile due to prices,” stressing that “the biggest challenge facing Iraq in increasing non-oil revenues is the lack of diversification of the Iraqi economy. In other words, the government must increase agricultural and industrial activities and other activities in the gross domestic product, as today more than half of the GDP is contributed by one commodity, which is oil, and diversification in production means that we create an internal economic process as well as job opportunities for citizens.”
He added, “Iraq, to this day, does not have a clear development plan enacted by law. When there is diversity in production, we need a strict and efficient tax system capable of transferring tax money to the public treasury, and we are in fact very far from this matter at the present time.”
Add to “double”
In turn, the economic expert, Mustafa Hantoush, believes that the most prominent thing that led to the increase in non-oil revenues in Iraq during the year 2024 is the success of the United Nations (Scud) program, as many containers now come through (regular customs) after they used to enter randomly, stressing that this step led to an increase in the revenues of the Customs and Ports Authority to (double).
Hantoush told Shafak News Agency, “There are also some self-financing companies (profitable) that have led to an increase in non-oil revenue rates, as the state has withdrawn part of the money from those companies (their revenues) and returned it to them when needed.”
He explained that “the challenges facing non-oil revenues in Iraq are the absence of only two factors, the first: the regulatory laws that allow the state to seize all revenues for all parties, the second: the electronic factor, in other words today the central bank when it transfers 65 million billion dollars for the purpose of purchasing goods, for example, it is supposed that from these amounts comes customs and taxes of 6 billion dollars, but so far this amount has not come, as we now see the amounts collected are only one and a half billion dollars.”
He added, “If the process of linking the Central Bank with the transfers and credits process and the outlets is completed and the amounts are taken in advance, for example, any transfer for a certain commodity has the insurance and tax fees taken in advance, here we will be able to raise the customs tax revenues in the country to the specified number when transferring the amounts annually to purchase the goods,” indicating that “many tax and traffic revenues, if the process of automation is completed, we believe that they will double.”
He explained that “the positive effects of increasing non-oil revenues are related to increasing the state’s treasury and thus enabling the state to move in wider financial areas, as there are many non-oil sources, perhaps the most prominent of which is the Ministry of Oil itself, as well as electricity, transportation and communications. In these ministries, the state is supposed to improve its ability to collect and exploit its capabilities.”
Hantoush confirmed, “There are places like the Baghdad Municipality and municipalities that have a huge wealth of properties that are not fully utilized. If the state is able to exploit these places and sites through specialized committees, we can enable the government to obtain large sums of money in this regard.”
Government Adviser: Non-Oil GDP Growth in 2024 Reaches Unprecedented Levels
The Financial Adviser to the Prime Minister Muthar Mohammad Saleh emphasized on Saturday that the growth rate of non-oil GDP in 2024 has achieved unprecedented levels. He further asserted that the government’s economic program has been successful in managing financial diversification within the national budget and the broader economy, while noting that the prudent approach of fiscal policy has been key to stabilizing the general budget’s liquidity and the macroeconomic environment.
In his statement to the Iraqi News Agency (INA), Saleh remarked, “The surge in non-oil GDP growth has been supported by a critical role played by monetary policy in regulating the monetary sector, in alignment with the Central Bank Law No. 56 of 2004.”
He added, “This monetary policy has remained robust and continues to function in close coordination with fiscal policy, complementing the government’s economy, which still constitutes 65% of the GDP and controls 98% of foreign currency inflows.”
Saleh further highlighted that the financial sector has contributed significantly, particularly through the strategic use of governmental borrowing instruments and the accumulation of foreign reserves from oil revenues, which have formed the foundation for the monetary base and subsequently bolstered the money supply in the country.
In a related issue, the financial adviser forecasted that the steady approach of fiscal policy would persist into 2025, with ongoing deepening of collaboration with the Central Bank’s monetary policy to ensure the continued management of budget liquidity and macroeconomic stability. He emphasized that this approach has been instrumental in reinforcing the success of Iraq’s economic policy in 2024, despite the complex global and regional challenges faced.
In conclusion, Saleh affirmed that the Central Bank functions as the government’s financial agent, overseeing the central management of both external and domestic public finances, while also coordinating government payments and managing public liquidity according to precise accounting standards and technical procedures. He reiterated that the methodologies employed by Iraq’s financial institutions are in line with global best practices, aimed at achieving the country’s strategic economic objectives.
