SULAIMANI (ESTA) — Iraqi Minister of Finance Ali Allawi said the economic crisis which Iraq is facing due to falling of oil prices and the coronavirus pandemic needs real reform, according to state news agency INA.
Allawi said in a statement that mismanagement and dependence on oil revenue were reasons for the current economic crisis in the country, INA reported.
The Iraqi finance minister added that tackling the crisis “needs real and radical reform and long-term plans,” according to the Iraqi news agency.
The federal government works to activate the sectors of agriculture, industry, tourism and investment in an effort to overcome the crisis, he stated.
Iraq, OPEC’s second-largest producer of crude, is facing an economic crisis over falling of oil prices and the coronavirus pandemic.
A large portion of Iraq’s budget relies exclusively on oil exports while the oil prices have plummeted amid the global recession due to the pandemic.
The World Bank estimates Iraq’s economy will shrink 9.7% in 2020 on back of lower oil prices and coronavirus, compared to 4.4% growth in 2019.
On Thursday, Allawi told AP that there was growing political will to undertake drastic reforms needed for the country to tackle a daunting liquidity crisis.
“There is more will than there was five months ago,” AP quoted Allawi as saying.
“Now, I think there is recognition that unless oil prices go up miraculously, this is something we have to cope with and manage”.
Last week, Iraqi Council of Ministers approved a 95-page “White Paper” for economic reform that, if implemented, would prompt a drastic overhaul of the entire system within three to five years.
“It is a paper to create a strategic and policy framework for a new Iraqi economy,” the Iraqi finance minister said. “In the end of this change and reform … we are supposed to have a restructured and more dynamic economy, that is the point of it.”
Top officials in Kadhimi’s government, including Allawi, have repeatedly said with oil prices not expected to rebound in the near-term, only reforms would see Iraq avoid an economic catastrophe.