IRAQI FINANCE FIGURES SHOW A “SOFT RENTIER” ECONOMY. ARE THERE ALTERNATIVES?

IRAQI FINANCE FIGURES SHOW A “SOFT RENTIER” ECONOMY. ARE THERE ALTERNATIVES?

An Iraqi economist warned on Wednesday against the country’s continued reliance on a rentier economy, noting that it “creates a consumer society” and weakens the national production base. Mohammed al-Hasani told Shafaq News Agency, “A rentier economy is usually weak and produces a consumer society dominated by the import sector, with little interest in manufacturing industries. This is what applies to Iraq.”

Al-Hasani called on the Iraqi government to “work and strive to develop Iraq’s industrial production sectors and diverse agriculture in order to stimulate the country’s foreign trade sector and achieve the highest possible financial revenues that contribute to achieving the highest returns for the national income and the Iraqi state treasury.”

The Iraqi Ministry of Finance revealed that federal budget revenues from January to March 2025 exceeded 27 trillion dinars, with oil accounting for 91% of total revenues.

Tables issued by the Ministry of Finance in June for the first quarter of the year, monitored by Shafaq News Agency, showed that oil remains the primary source of revenue for the general budget, reinforcing the rentier nature of the Iraqi economy.

According to the ministry’s data, total revenues amounted to 27 trillion, 248 billion, 764 million, 196 thousand, and 554 dinars, while total expenditures amounted to 26 trillion, 662 billion, 428 million, 661 thousand, and 44 dinars.

Oil revenues alone amounted to 24 trillion, 911 billion, 906 million, and 926 thousand dinars, equivalent to 91% of total revenues, while non-oil revenues amounted to 2 trillion, 336 billion, 857 million, and 269 thousand dinars.

In March 2021, the Prime Minister’s advisor for financial affairs, Mazhar Mohammed Salih, explained to Shafaq News Agency that the reasons behind the Iraqi economy remaining rentier are due to the wars and economic blockades of the past decades, in addition to the current political conflicts that have squandered economic resources.

Saleh added that the country’s continued reliance on oil as its sole source of revenue makes Iraq vulnerable to global crises that impact oil prices, forcing the country to repeatedly resort to borrowing to cover its deficit. This reflects weak financial management and an inability to develop effective financing alternatives.