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Iraq’s economy to grow 10 percent in 2013

Iraq, Oil field

Iraq, Oil field

Albanian Minerals President and CEO Sahit Muja has predicted that Iraq’s economy will grow 10% in 2013.

International Monetary Fund predicted to witness economic growth in Iraq during the current year 2013 increased by 9 percent due to the rapid growth of the definitive oil in the country, while calling the Iraqi government to focus private sectors other than oil to secure the balance of economic not be subject to oil production and fluctuations world prices.

The Fund in a report issued on Thursday following the end of consultations in Amman between a delegation of the Fund and the Iraqi delegation headed by VMware Planning Ali Shukri, and seen (long-Presse) it said that “is expected to grow the Iraqi economy rate of 9% through 2013, especially in light of the increase Rapid oil production significantly, “noting that” economic growth rate of 8% during the year 2012, reinforced by higher oil production. “ holds the world’s second largest oil reserve, after Saudi Arabia. However, it is estimated by the US Energy Information Administration (EIA) that around 90 percent of the country’s oil resources are unexplored due to wars and sanctions

According to U.S government Iraq has the world’s fourth-largest oil reserves and is producing more than 3 million barrels of crude per day for the first time in three decades as its industry recovers from years of war and sanctions.
Iraq’s largely state-run economy is dominated by oil sector, which provides more than 90% of government revenue and 80% of foreign exchange earnings. Iraq in 2012 boosted oil exports to a 30-year high of 2.6 million barrels per day, a significant increase from Iraq’s average of 2.2 million in 2011.

Government revenues increased as global oil prices remained persisently high for much of 2012. Iraq’s contracts with major oil companies have the potential to further expand oil exports and revenues, but Iraq will need to make significant upgrades to its oil processing, pipeline, and export infrastructure to enable these deals to reach their economic potential. Iraq is making slow progress enacting laws and developing the institutions needed to implement economic policy, and political reforms are still needed to assuage investors’ concerns regarding the uncertain business climate, which may have been harmed by the November 2012 standoff between Baghdad and Erbil.

The government of Iraq is eager to attract additional foreign direct investment, but it faces a number of obstacles including a tenuous political system and concerns about security and societal stability. Rampant corruption, outdated infrastructure, insufficient essential services, skilled labor shortages, and antiquated commercial laws stifle investment and continue to constrain growth of private, nonoil sectors.

In 2010, Baghdad signed agreements with both the IMF and World Bank for conditional aid programs designed to help strengthen Iraq’s economic institutions. Iraq is considering a package of laws to establish a modern legal framework for the oil sector and a mechanism to equitably divide oil revenues within the nation, although these reforms are still under contentious and sporadic negotiation. Political and economic tensions between Baghdad and local governments have led some provincial councils to use their budgets to independently promote and facilitate investment at the local level.

The Central Bank has successfully held the exchange rate at about 1,170 Iraqi dinar/US dollar since January 2009. Inflation has remained under control since 2006 as security improved. However, Iraqi leaders remain hard pressed to translate macroeconomic gains into an improved standard of living for the Iraqi populace.

Unemployment remains a problem throughout the country despite a bloated public sector. Encouraging private enterprise through deregulation would make it easier for Iraqi citizens and foreign investors to start new businesses. Rooting out corruption and implementing reforms – such as restructuring banks and developing the private sector – would be important steps in this direction.
By: Diana Green
New York News