Total reliance on oil revenues may lead to catastrophic consequences to economy

Total reliance on oil revenues may lead to catastrophic consequences to economy


Iraq’s Tax Authority has warned against what it described as total reliance on oil export revenues.

“The country depends wholly on royalties from oil exports. The catastrophe for the economy is inevitable once oil wells start aging,” said the authority’s director-general Kadhem Abdullah.

Abdullah said the country lacked “a clear strategy” on how to diversify its income. The constitution, he added, calls for the creation of a market economy, but regulations and rules managing the economy are the opposite.

Abdullah said the government and its ministries are now more concerned about fighting corruption than rejuvenating the economy.

“Fears of accusations of corruption have prompted officials in charge of economic development not to spend allocations and return them to the treasury,” he said.

He warned if those in charge of reconstruction refused to spend allocations for fear of being accused of corruption continues, there will no room left in Iraq for development and creativity.

Abdullah said tax income in Iraq was “meager” as most investors and entrepreneurs were keen to smuggle their profits outside the country.

Oil revenues are surging with hard cash and gold reserves the highest in the country’s history. Hard cash reserves have skyrocketed to $76 billion and gold bullions to 30 tons.

But Abdullah said the government lacked the right picture on how to encourage its ministries and related departments to invest their allocations on development and reconstruction.

He also said laws and regulations on tax collection and lack of transparency were preventing the establishment of a sound tax system in Iraq.