by admin | April 29th, 2013
Attempts to reduce the dependence of Iraq on revenues from the oil industry count as one of the most positive impacts on the country’s dinar currency in recent years. Better fortunes lie in store for Iraq and its people thanks to the numerous international initiatives that aim to help it focus economic rebuilding on other industry sectors.
Clearly, there is a tremendous task ahead for Iraqi economic planners to steer the country’s growth via a more diversified route. After all, the oil industry has been the country’s main economic primer prior to the Gulf War. In 1980, Iraq’s oil sector generated $27 billion in revenues from its output of about 4 million barrels daily. With the magnitude of such dollar earnings, the dinar currency enjoyed favourable rates in the exchange markets. This strength of the dinar is manifested by the Iraqi foreign reserves which stood at $38 billion prior to the war’s outbreak.
Succeeding events, however, proved debilitating to the dinar currency. The hostilities that erupted between Iraq and Iran plunged the former into some $45-billion indebtedness. These debts severely depleted Iraq’s foreign reserves to the detriment of its dinar currency, among other major debacles. The UN economic sanctions and subsequent invasion of the U.S.-led Coalition forces caused further debilitation of the Iraqi economy.
With the installation of a new government in Iraq following the war, initial rebuilding efforts were channelled into the oil industry which then still accounted for 90 percent of the country’s economy. In more recent years, however, economic activity has conspicuously moved beyond the oil exploration and oil production activities of foreign companies in Iraq.
Some of the noteworthy endeavours toward this direction were those undertaken jointly by international bodies like the UNICEF, WHO, and USAID, efforts which are trickling into the steady appreciation of the Iraqi currency. Among the outstanding results of these cooperative international efforts was the raising of over $35 billion in an Iraqi donors’ conference in Madrid in 2003.
Much can be expected too from USAID initiatives to help Iraq be integrated into the world economy via various economic programs outside of the oil industry. These efforts include assistance to Iraq’s efforts to strengthen its agriculture and agribusiness sectors, potent areas which truly can help much in the economic diversification in the country.