Iraq Economic Monitor, Spring 2022 : Harnessing the Oil Windfall for Sustainable Growth

Iraq's economy is gradually emerging from the deep recession caused by the pandemic and the plunge in oil prices in 2020. Higher oil revenues pushed Iraq's overall fiscal and external balances into a surplus in 2021. The turnaround in oil markets has significantly improved Iraq's economic outlook in the medium term. Iraq's fiscal and socio-economic fragilities underscore the urgency of wide-ranging structural reforms by the new government. Iraq's existing food security challenges have intensified with the recent surge in global commodity prices. To plug the food supply gap, Iraq has become increasing reliant on imports for more than half of its food consumption, which has increased the country's exposure to global food price and supply shocks. Subsidies and direct transfers, including recently new measures announced by Government of Iraq (GoI), partly mitigate the impact of rising global prices in the short term. However, achieving food security calls for coordinated efforts to improve domestic production including through raising the efficiency of irrigation water, reducing and rehabilitating soil degradation, improving land management, and implementing climate change adaptation and mitigation measures including the adoption of climate-smart agriculture