Iraq's economic ordeal

Iraq's former minister of planning has warned of Iraq's economic "ordeal," stressing the need for sound management of the accumulative cash surplus.

"Iraq has a cash reserve of more than $20 billion, which has boosted the value of the Iraqi dinar and its purchasing power, in addition to a large credit of over $10 billion by the Iraqi Development Fund," Former Minister Mahdi al-Hafiz, who is also a member of the parliamentary economic committee, indicated in a thorough study published by the Jordanian al-Ghad (Tomorrow) newspaper on Monday.

Hafiz highlighted the need to adopt a thoughtful strategic vision and setting up profitable programs with the aim of preserving the country's natural resources and ensuring a reliable source of income.

The study also called to reconsider the budget’s spending structure and rationalize the expenditure.

"Outlining the weaknesses in the current policy and the economic performance is a must to rectify all deficiencies and implement the required structural reforms," the study explained.

The study criticized Iraq's increasing dependence on oil export revenues as a main source of income. According to the 2008 budget, over 85% of Iraq's income is generated by oil exports, which the study said poses great risks to the economy in case of oil price fluctuations.

The minister also described the shortage of direct and indirect tax revenues as an indication of a lagging economy, but said that the mobile phone revenues are quite promising.

The study concluded by outlining some aspects, which Hafiz said must be carefully handled to sustain a healthy economy. Enforcing the rule of law and ending the presence of foreign troops in the country are the first priorities set by the study.