Iraq’s economic crisis is about to get worse. The government, which relies on oil for 90% of its revenue and 80% of foreign exchange earnings, faces plunging oil prices combined with rampant corruption and the exorbitant cost of battling the Islamic State (IS). Iraqi officials must come up with solutions that take all those circumstances into account.
The country's economic problem is influenced particularly by two factors. The first is related to Iraq's socialist economic system and its absence of an economic infrastructure and free active market correlated with global markets. The Iraqi infrastructure is significantly damaged as a result of long-term wars and sanctions. The economic system was mostly controlled by the government for more than half a century. Although the private market has significantly grown since 2003, it remains weak. Moreover, the local private market does not contribute to the global market.
