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Iraqis must be patient on economy, prime minister says
February 12, 2015 / 2:42 PM / 3 years ago

Iraqis must be patient on economy, prime minister says

BAGHDAD (Reuters) - Iraq’s prime minister called on Thursday for “patience” while the government implements economic reforms that include restructuring of many state-owned companies, saying the plan would deliver growth and development.

Iraq's Prime Minister Haider Al-Abadi addresses to media during a joint press conference with German chancellor Angela Merkel (not pictured) in Berlin February 6, 2015. REUTERS/Hannibal Hanschke

Haider al-Abadi, who took office in September after Islamic State militants seized control of large parts of north and west Iraq, is under pressure to improve economic and security conditions while navigating a polarized political landscape.

Iraq is struggling to attract foreign investment and diversify its revenue sources away from oil, the price of which plunged in the second half of last year.

“We call on citizens to be patient. Success and development are coming,” Abadi told an investment conference in Baghdad.

“If we stick to the reform plan, soon there will be economic breakthrough.”

Abadi said the government aimed to restructure some state-owned companies although he did not say which, when changes would happen, or whether it would entail privatization.

“We want these companies to be more efficient and contributive to the Iraqi economy,” he said, adding: “The government has no intention to get rid of the workers in these companies.”

Many state firms have barely functioned since the U.S.-led invasion to topple Saddam Hussein in 2003 and many related to the military have been shut down.

Iraq’s economy, which gets about 90 percent of its revenues from oil, was battered last year by plummeting global oil prices and the land grab by Islamic State which prompted big spending on the military and displaced populations.

Defence alone is expected to take up 20 percent of 2015 spending in a budget passed by parliament last month which includes a deficit of 25 trillion dinars ($22 billion) to be financed through borrowing.

The government also has to ensure more than 5 million state employees are paid.

Finance Minister Hoshiyar Zebari has said Iraq plans to use its Special Drawing Rights to raise financing from the International Monetary Fund.

A senior IMF official told Reuters the financial institution was open to providing additional funding to the war-torn nation.

“They certainly could (ask for more money). So far they haven’t ... We had a program before with Iraq. It’s their call,” the official said.

When extending emergency loan programs to countries, the IMF has often pressed them to introduce economic reforms such as restructuring state finances.

Reporting by Stephen Kalin and Saif Hameed in Baghdad and Anna Yukhananov in Washington; Editing by Catherine Evans

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