Mr. Douglas Silliman, Chargé d’Affaires at the U.S. Embassy in Baghdad, added, “There is no shortage of economic and institutional challenges, but the political leaders have in their hands the opportunity to make effective long-term changes that could bring prosperity and stability to Iraq and its citizens.”
The conference generated a lively debate about Iraq's economic future, with a focus on building a private sector through National Development Plan goals and investment laws. Many participants observed that oil is a blessing for Iraq offering opportunities for development that outweighs any "resource curse" or "Dutch disease" dangers.
At current levels of productivity and exchange rates, Iraq is uncompetitive in all tradable goods with the exception of minerals. Many of the goals of the National Development Plan - increased productivity and employment, less poverty, and a diversified economy - have yet to be fulfilled.
Iraq’s public sector now accounts for 43% of the country’s total workforce. This level of public sector employment will be difficult to sustain, warns the report, if oil prices fall.
Government fuel subsidies for both state-owned enterprises and the public cost Iraq 30% of its GDP. Fuel subsidies and the large public sector payroll restrict the amount of funds available to build infrastructure in electricity, water, transportation, housing, agriculture, health, and education.
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