Iraq at “critical turning point” as oil dependence deepens, research center says

Shafaq News – Baghdad

Iraq needs a “realistic diagnosis” of its economic imbalances to implement effective reform policies, a step that cannot succeed without a strong private sector instead of continued reliance on the state as the sole engine of the economy, the Jordan-based Al-Rawabet Center for Research and Strategic Studies said, describing the country as standing at a “critical turning point.”

In a report, the center said Iraq’s economy has long suffered from a clear paradox: despite possessing substantial financial resources, it has struggled to transform them into real and sustainable development, noting that Iraq’s current state of relative financial stability does not necessarily reflect a sound economic structure, but rather conceals deep-rooted structural imbalances caused by excessive dependence on oil, an expanded role of the state, and weak economic and administrative institutions.

According to the report, successive governments have managed short-term stability by expanding public spending, benefiting from oil revenues and rising foreign reserves. However, this approach has created a fragile economy that depends on oil price shocks rather than productive activity.

Public budgets, the center explained, have expanded significantly since 2004, not due to growth in the productive base, but as a result of rising operational expenditures, particularly salaries and subsidies. This has made the state the largest employer and income source in the country, imposing a permanent burden on public finances and limiting the government’s ability to direct resources toward long-term investment and development.

To continue reading, click here.