How to resolve Iraq's economic crisis
It's time for Iraq to look beyond stopgap measures and develop a larger plan to resolve the country's dire economic situation.
The Iraqi government faces a huge budget deficit and is having difficulty running the country’s economic activities because of plummeting oil prices, the heavy burden of the war against the Islamic State and rampant corruption.
Prime Minister Haider al-Abadi faces numerous problems that require immediate attention, such as the public's anger over austerity measures that hurt ordinary workers. Iraqis are also demanding that the government improve its performance and bring corrupt officials to justice.
It's not a good time to be the Iraqi premier. The year 2015 started with a budget deficit of $20 billion on a $103 billion total budget. The situation is expected to worsen in 2016, as the Finance Ministry is setting the 2016 budget at $99.65 billion, with a deficit of $25.81 billion.
The estimated 2016 budget is as unrealistic as the 2015 budget. A major part of its funding relies on fluctuating oil revenues, which are expected to reach $55 billion in a best-case scenario. Non-oil revenues are not expected to exceed 10% of Iraq's total income, based on past years. In some periods from 1921 to 2012, non-oil revenues in Iraq did not even exceed 5% of total income.
