Iraq's economy and the Iraqi dinar rely heavily on its oil sector, which accounts for 90 percent of the country's foreign earnings. Currently, Iraq produces an average of 2.7 million barrels a day with 2.2 million barrels of this production being exported daily. The country plans to increase its production and also its export capacity in the next ten years after the successful three rounds of oil bidding. However before any of these can become possible, the country needs to address first a handful of problems related to infrastructure, technical, and finances. |
Iraq seeks to pass its own set of laws to stabilize and strengthen its economy. This includes the hydrocarbon law, which encourages development of the country's oil and gas sector. There is also the revenue-sharing law that helps divide the country's revenues from its oil and gas production into equal parts among its provinces, Central government, and the Kurdistan Region. Structural reforms including bank restructuring as well as subjecting state-owned businesses and establishments to corporatization are important to sustain the country's economic expansion based on its private sector growth. Equally important is the eradication of corruption in the country.
Since 2003, foreign assistance has been fundamental in Iraq's efforts and commitment to its reconstruction. In October of 2003, a pledge amounting to $33 billion and more to assist the country became possible during the donor's conference held in Madrid. The International Reconstruction Fund Facility for Iraq or IRFFI was launched by World Bank and the UN to oversee and distribute funds amounting to $1.7 billion from the pledged amount. The remaining amount is to be distributed bilaterally.
Funds amounting to $18 billion in technical and financial assistance, trade finance, soft loans, and loan facilities have been pledged by international donors since 2003. The combined pledges of international donors for technical assistance and grants amounting to $6.5 billion have exceeded by $1.3 billion more. Pledges for total soft loan reached $12.8 billion and $6.5 billion of it has already been committed. Japan, the foremost contributor for soft loans has committed close to $3.3 billion to fund projects in Iraq. Both the IMF or International Monetary Fund and World Bank have approved a number of new programs to help minimize and eventually close the distance between pledges for soft loans and commitments. With the help of the international donors, Iraq will be able to continue its reconstruction, which will lead to the Iraqi dinar and the country's economy stabilizing in the years to come.
Mike Moore is published on more than 300 websites. He writes on various topics including from dinari, currency, currency exchangecurrency exchange and buying dinari'. He is published at www.dinarinc.com
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