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The bank stated in a press statement seen by "Al-Iqtisad News" that "the Iraqi economy continued its recovery, driven by the oil boom, after the severe recession resulting from the Corona pandemic in 2020, while the non-oil sectors are still suffering from recession, and growth obstacles have appeared again."
He added, "Despite the unexpected achievement of record oil revenues, and the approval of the long-awaited new fiscal budget, Iraq is still liable to miss the opportunity to move forward with the implementation of urgent and long-awaited reforms, which are extremely important in order to promote private sector growth and save millions of dollars." required jobs over the next ten years.
He added, "The consumer price inflation rate, which was at medium levels in 2022, has increased in early 2023, due to the depreciation of the Iraqi dinar in the parallel market."
He noted that "favorable oil market dynamics in the first nine months of 2022 led to a rise in total reserves, excluding gold, to a record high of $89 billion, however, this trend slowed in early 2023."
And he indicated that "Iraq's budget for the years 2023-2025, which was approved recently, indicates a significant expansionary trend in public finances that may lead to a rapid drain of unexpected oil revenues, and thus to a return to pressure on public finances. It may also delay the long-term and necessary structural reforms." To develop and develop a vibrant and sustainable economy.
He noted that "unless structural reforms are carried out, the development model, which depends mainly on oil in Iraq, will suffer severely, and the total GDP is expected to contract by 1.1% in 2023, driven by an expected contraction of 4.4% in the gross domestic product." oil in light of the OPEC + production quotas agreed upon for this year.
And he stressed that "the weak desire to carry out reforms, even in light of the decline in oil prices, will not help reduce the control of the public sector over the Iraqi economy, and increase the potential for non-oil growth and job creation, all of which would limit the prospects for economic growth in the long term." He pointed out that greater risks are looming on the Iraqi economy, represented to a large extent by the deep structural challenges that have not been addressed, and which severely expose it to the risks of oil shocks, inflationary pressures, the growing effects of climate change, and increased volatility in commodity prices, which may exacerbate current trends. towards poverty, and increases food insecurity.
Speaking in this regard, Jean-Christophe Carré, Regional Director of the Middle East Department at the World Bank, said, “Iraq is witnessing a strong recovery after many years of turmoil. However, it cannot continue to rely solely on oil windfalls for recovery in the short term.” He pointed out that "the absence of a high political commitment to adopting and implementing the necessary reforms that Iraq called for a long time ago, will face the risks of depleting its reserves at an accelerated pace, and returning to square one in a very short time. It is necessary to take urgent measures to accelerate the move towards diversifying economic activity and addressing the factors." list that increases economic vulnerability, and addresses pressing climate-related challenges to secure the long-term well-being of the Iraqi people.”
And he stated in the statement that "the special chapter of the report entitled "Financial Intermediation in Iraq" the Iraqi financial sector, and concludes that the lack of capital of the dominant state-owned banks, and the weakness of the private commercial banking sector, are two of the obstacles that prevent the achievement of diversification of economic activity.
The report stresses the importance of reforming the banking sector and promoting digital financial services in order to increase financial intermediation activities and enhance financial inclusion. These recommendations aim to transform the financial sector into a catalyst for the diversification of the economy.
Added 08/01/2023 - 10:08 AM
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