Iraq's goal is to increase non-oil revenue by 20% of its national income
Iraq has set an ambitious goal to increase non-oil revenues to 20 percent of its national income.
This is urgently important because the IMF, aka the International Monetary Fund, will not support Iraq's increase in currency value until it has more non-oil annual revenue. If you remember, Iraq almost went bankrupt during the pandemic when oil revenue went to nearly zero.
Non-oil revenues, encompassing taxes, customs, and earnings from sectors outside hydrocarbons, rose to nearly 12 percent of total revenues in the first nine months of 2024, up from about 7 percent before the approval of Iraq's landmark three-year budget in 2023. Mudhar Saleh, a financial adviser to Prime Minister Mohammed Al Sudani, emphasized that the government is implementing a long-term plan to boost non-oil earnings across various sectors to stabilize the budget.
The rise in non-oil revenues has been attributed to increased import customs and expanded taxes, as well as contributions from sectors such as housing, transport, and construction. According to the Al Mustaqbal Centre for Economic Studies and Consulting, non-oil revenues jumped from approximately 4.7 trillion dinars ($3.58 billion) in 2023 to nearly 14 trillion dinars in 2024. This significant growth is linked to heightened customs tariffs and improved tax collection, aided by advanced digital operations introduced as part of government reforms. Meanwhile, oil income dropped to its lowest share in recent years, accounting for 88 percent of total revenues in 2024.
Customs earnings saw notable growth, more than doubling to 1.9 trillion dinars in 2024 from 900 billion dinars in 2023, as reported by the General Customs Authority. Saleh noted that these gains reflect a disciplined approach to tax and customs management. In parallel, Atwan Al Atwani, head of Iraq's parliamentary finance committee, affirmed the government's commitment to achieving medium- and long-term fiscal and economic stability by expanding the non-oil sector's contribution to GDP.
Despite these advancements, Iraq still faces challenges with a substantial $49 billion budget deficit recorded in 2023. The three-year budget, approved in 2023, set annual spending at $153 billion for 2023, 2024, and 2025, based on an average oil price of $70 per barrel and a production target of 3.5 million barrels per day, including 400,000 barrels per day from the Northern Kurdistan region. Iraq, OPEC's second-largest oil producer after Saudi Arabia, has yet to release detailed figures for its 2025 budget.
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