Iraq's fiscal challenges highlight overreliance on oil revenues

Shafaq News/ On Sunday, Iraq's Ministry of Finance disclosed that the country's fiscal revenues in the federal budget surpassed 54 trillion Iraqi dinars ($41 billion) over the first five months of the year, with oil contributions remaining steady at approximately 89%.

Data released by the Ministry for January through May highlighted oil as the primary revenue source, reflecting Iraq's heavy dependence on crude exports amid ongoing economic challenges.

The total revenues for the period amounted to 54,703,848,603,009 dinars, while expenditures, including advances, reached 21,701,453,601,000 dinars.

According to the financial statements, oil revenues totaled 48,455,060,171,000 dinars, constituting 89% of the general budget. Non-oil revenues amounted to 6,788,431,731,000 dinars.

Economic expert Mohammed Al-Hassani, speaking to Shafaq News, criticized Iraq's heavy reliance on oil, stating, "An economy entirely reliant on oil renders the country economically and socially vulnerable." highlighting the neglect of other sectors such as agriculture, industry, and services, warning that without diversification, Iraq would struggle to withstand global economic crises.

Earlier in July, the Future Iraq Foundation reported a notable shift, marking the first time non-oil revenues contributed 11% of total income, signaling a slight decrease in oil revenues from their usual 90% threshold.

The report highlighted a 118% increase in tax revenues from incomes and wealth and a staggering 285% rise in revenues from commodity taxes and production fees. Fees revenue also rose by 50%, while oil revenues saw a 6.4% increase.

Financial Affairs Advisor to the Prime Minister, Mazhar Mohammed Saleh, attributed Iraq's continued reliance on oil to past economic blockades and ongoing political conflicts. He underscored the nation's vulnerability to fluctuations in global oil markets, necessitating continual external and internal borrowing to cover budget shortfalls.