Sun Jun 5, 2005
BAGHDAD (Reuters) - Iraq relies far too heavily on oil exports for generating revenue, a senior government official said on Sunday, as he urged Iraqis to diversify production and create alternative sources of income.
"Ninety-five percent of Iraq's national income is dependent on oil and that's an oddity," Laith Kubba, spokesman for Prime Minister Ibrahim Jaafari, told a news conference.
"If we take a country like Saudi Arabia, it's 60 percent, and in another oil producing country it might be 40 percent. Iraq is in an exceptional situation," he said.
Last year, Iraq's government had revenues of around $20 billion, nearly $18 billion of which came from oil exports.
What that figure shows as much as anything else, Kubba said, was that under Saddam Hussein's rule Iraqis grew complacent, believing that oil revenue would provide for all expenditure.
"It proves that the Iraqi economy is dependent -- people wait for someone to give them money, but there isn't real production," he said. "The idea of waiting and thinking that improvement will come only from the government is over."
He said Iraqi ministries also had to learn to rein in their spending, pointing out that if they had been left to spend as they had wanted last year, the government would have run up a $4 billion deficit -- around 20 percent of income.
Iraq currently produces about 2.1 million barrels of oil a day, about 1.3 million of which are exported. At current prices of around $50 a barrel, that's income of about $65 million a day or $23 billion a year.
Before the war that ousted Saddam, oil production was running at around 2.9 million barrels a day, of which 2.1 million were exported.
The decline in exports and production is due to near constant sabotage attacks on oil pipelines, which has also delayed efforts to overhaul the entire infrastructure and make Iraq a modern, more efficient exporter.
While the current high price of crude oil is a huge boon, Kubba said, Iraq could not rely on that state of affairs continuing and needed to diversify the economy.
"We can't stay at this level even if oil prices remain as they are," he said. "The real solution is to launch the abilities of Iraqis to produce for themselves. Iraqis are vital and productive people but currently there is a state of unrest and panic."