Al Abadi announces plan to wean Iraq off oil and grow private sector

Iraq’s government unveiled a five-year economic development plan to wean the country off its dependence on oil and build its private sector.

The plan was announced at a cabinet meeting on Sunday, led by Prime Minister Haider Al Abadi. Baghdad depends on the oil sector for more than 90 per cent of its revenue.

The strategy, announced ahead of next month’s elections, aims to expand the private sector, rebuild the wartorn provinces, ease poverty and improve governance.

“The strategy will focus on the development of the agriculture industry, with a target of 7 per cent growth, in addition to providing sustainable employment opportunities for nationals,” the cabinet said.

Mr Al Abadi said that the country was “working to establish a healthy economy with diversified revenues that does not depend on the changing price of oil”.

Rasha Al Aqeedi, a researcher at Al Mesbar Studies and Research Centre in Dubai, said that unless Iraq rid itself of mismanagement and corruption, “no plan is realistic”.

“Mismanagement and corruption drains most of Iraq’s income – mismanagement being a budget burdened by a bureaucracy that pretends to work,” Ms Al Aqeedi told The National.

“Iraq has an excess of desk employees in the public sector. Are there proper plans to scale down the bureaucracy while providing private sector jobs?

“The same concerns of every new annual budget remain valid. How much of a role do patronage and partisan loyalties play into this new plan?”

This month the country marks the 15th anniversary of the fall of dictator Saddam Hussein. In those 15 years, Baghdad’s central government has faced mounting sectarianism and battled against ISIL, which seized a third of the country in 2014.

Underlining its current reliance on oil, the cabinet also approved a plan to raise the production capacity of crude oil to 6.5 million barrels per day over the space of five years.

In January, the Iraqi Oil Minister Jabar Al Luaibi, said that capacity was close to 5 million bpd.

The country is producing more than 4.4 million bpd in line with an agreement between the 14-member Organisation of Petroleum Exporting Countries and other exporters, including Russia, to cut supply and boost oil prices.

Iraq, Opec’s second-largest producer after Saudi Arabia, plans to award oil and gas exploration and development contracts in 11 new blocks on April 15.

The Iraqi economy is expected to grow 1.5 per cent this year before increasing to 4.5 per cent in 2019, BMI Research said in a report.

“The extension of the Opec deal until the end of 2018 will continue to weigh on the country’s exports through the end of the year,” the report said.

“However, next year the completion of new development phases of major oil fields will boost production capacities and support headline growth.”

Spending on infrastructure will boost Iraq’s non-oil economy and increased government spending ahead of the elections will enhance consumer spending, BMI said.

But the report stipulates that insufficient funding and endemic corruption, as well as Opec oil supply cuts in the country, will weigh on the pace of progress.

Mismanagement and corruption drains most of Iraq’s income – mismanagement being a budget burdened by a bureaucracy that pretends to work RASHA AL AQEEDI Researcher at Al Mesbar Studies and Research Centre in Dubai