More than half of the revenues Iraq obtained last year from oil sales and domestic incomes have gone outside of the country to meet internal needs, something Iraqi officials want to tackle through setting a five year long term recovery plan to rebuild the country’s infrastructure.
In coordination with the UN, the Iraqi government held a conference in Erbil to discuss the mechanisms of formulating the five year plan in a bid to rid Iraq of the overwhelming financial burdens it has faced in the wake of the fight against ISIS and massive flows of Internally Displaced Persons (IDPs).
Explaining the long term plan Iraq is working on from Erbil, Alaadin Jaafar, an official from the Finance Ministry said “the plan sets out how Iraq could increase its incomes aside from oil revenues.”
An estimated “$350 to $400 billion” is needed during the period for the recovery plan, he detailed.
Iraq’s national and foreign debts will most likely to have exceeded $125 billion before the end of this year despite growing oil production and revenues, according to the International Monetary Fund (IMF) which offers annual projections of financial conditions across the world.
According to the predictions, the debts will land around $134 billion by the end of next year despite steady oil production. This is expected to raise the current 4,5 million barrels per day (bpd) by 10 percent to 5 billion.
The Iraqi Ministry of Planning, however, says the implementation of the plan will not be easy since earmarking $400 billion is a huge amount.
“Succeeding the plan will not be easy as billions of dollars flow out of Iraq every year,” Dr. Mahmood Daghr, Finance Manager at the Iraqi Central Bank who was an attendant of the conference, told Rudaw.“
“In last year alone, $45 billion has gone abroad for goods while the Iraqi budget was $70 billion as a whole,” he noted.
As Daghr stated, the Iraqi government's key source of income comes from oil exports which covers 95 percent of the fiscal budget to Baghdad, but this sector is also at stake.
The savings of the Iraqi government had reached $90 billion in 2013, but this amount has now steadily plummeted to $53 billion, he warned.
Corruption and lack of transparency are two key factors leading to worsening financial stability in Baghdad.
Another official from the Planning Ministry said “corruption and the embezzlement of the incomes of Iraq are so high, it cannot be even counted.”
Based on data his ministry has collected, he warned “corruption rate in the revenues Iraq obtains have exceeded 50 percent.”
He mentioned that the Electricity Ministry is a major victim of corruption because “until now $36 billion has been expended in this sector, but power given to the people is only between 6 to 8 hours per day. Besides embezzlement and corruption, what other explanation can you provide when a large amount of money is spent and there is no electricity.”
More dangerous than that, he warned, is employing “a group of people whose job is to just embezzle money.”
The UN is the major player in formulating the plan to boost Iraq’s economy in the post-ISIS phase.
The fight against ISIS has done Iraq great harm due to destructive urban warfare with the jihadists as some areas are partly destroyed and others completely demolished.
The Iraqi Construction and Housing Ministry revealed through data that damage caused in the once thriving cities in the northern part of the country have suffered greatly.
“Eighty percent of the cities where the fight against ISIS took place are destroyed,” said Istebraq Ibrahim, deputy minister of the Housing and Construction Ministry.
Ibrahim, who has served in the ministry for 39 years, went on to yearn that “the majority of cities are destroyed in a way that scars of destruction could be clearly noticed in every sectors of life.”
The city of Ramadi in Anbar which fell to ISIS in May 2015 until it was retaken by the Iraqi government in the beginning of 2016 has been damaged more than any other place.
The fight against ISIS has not ended, but the group is largely weakened as they continue to withdraw from areas they once controlled in Nineveh province. To rebuild the war-ravaged area, Ibrahim suggests, they need $70 billion.
The war on ISIS has not only damaged the roads, buildings and civilian houses, but also Iraq’s largest oil refineries
Ziya Jaafar. Deputy Minister of Oil, pointed out that “the loss Iraq has suffered due to ISIS in the oil sector is more than $15 billion, of which $10 billion was at Baiji refinery alone.”
Baiji refinery located in Bajji, Salahadin province is home to Iraq’s largest refinery which briefly fell to the hands of the militants.
“As part of the long term recovery plan,” Jaafar explained, Iraq aims to “increase oil exports to 7,500,000 barrels of oil per day over the next five years.”
Iraq and the Kurdistan Region have 152 billion barrels of oil which are not drilled yet.
Based on $42 a barrel, Iraq has estimated to receive around $56 billion in 2017 from oil sales, according to the country’s budget. The government has an $85 billion budget for the current year.