Iraq's rentier economy: Risks and reforms
Shafaq News/ Iraq’s continued dependence on a rentier economic model poses long-term risks, as it encourages a consumption-driven society and weakens domestic production, an Iraqi economist warned on Wednesday.
Speaking to Shafaq News Agency, economic expert Mohammed al-Hassani said, “A rentier economy is usually fragile, creates a consumerist society dominated by imports, and neglects transformative industries — a description that fits Iraq.”
Al-Hassani urged the Iraqi government to take concrete steps toward developing the country’s industrial and agricultural sectors to invigorate foreign trade. “This would help generate higher state revenues, support the national income, and strengthen the federal treasury,” he added.
Recent data from Iraq’s Ministry of Finance showed that revenues in the federal budget exceeded 27 trillion dinars (about $18,8M) between January and March 2025, with oil contributing 91% of the total — reinforcing the rentier nature of the economy.
According to financial reports released in June, Iraq’s total revenues for the first quarter amounted to 27.25 trillion dinars, while total expenditures reached approximately 26.66 trillion dinars.
Oil revenues alone stood at 24.91 trillion dinars, accounting for 91% of total income. Non-oil revenues amounted to just 2.33 trillion dinars.
In a prior statement to Shafaq News, the prime minister’s financial advisor, Mudher Mohammed Salih, attributed the persistence of Iraq’s rentier economy to decades of war, international sanctions, and ongoing political instability — all of which have squandered the country’s economic potential.
Salih added that Iraq’s continued reliance on oil as its sole revenue source leaves it vulnerable to global market fluctuations. This dependence, he noted, often forces the country to resort to borrowing to cover fiscal deficits, highlighting weak financial management and the lack of viable alternative funding strategies.
