BAGHDAD: Iraq's prime minister warned Wednesday that if the country continues to depend on revenues solely from oil it will be left vulnerable to the world's financial crises.
Iraq must diversify its revenue streams by using funds from increased oil production to start new enterprises, Prime Minister Nouri al-Maliki said during a two-day economic conference in Baghdad.
"The revenue must not rely on a single source, and that is the main problem the Iraqi economy suffers from," al-Maliki told a two-day economic conference in Baghdad.
Iraq's economy has been hit hard by plummeting oil prices, which dropped from a high of $150 a barrel to under $40 per barrel. Oil revenues account for nearly 95 percent of Iraq's budget.
The Iraqi government was forced to slash its 2009 budget twice — first from $79 billion to $68.6 billion and then, most recently, to $64 billion. The parliament has yet to approve the budget because it is still considering further cuts.
On Wednesday afternoon, the price per barrel hovered at about $40 a barrel on the New York Mercantile Exchange.
"We have to develop other enterprises and diversify our revenues otherwise any crisis in the world will definitely affect the Iraqi economy," al-Maliki said.
Al-Maliki said Iraq must use its oil money to revive industries that have suffered from decades of war and negligence.
Planning Minister Ali Baban told conference-goers there were four pressing issues facing Iraq's economy: reliance on oil revenues, budget expenditures, lack of foreign investment and an idle private sector.
"We are facing a serious threat. We can't leave allow future generations of Iraqis to be held hostage by one commodity," he said.
"I'm afraid the government will reach a stage of economic recession, one in which it can't fulfill its commitments."
Iraq, which sits on the world's third-largest oil reserves of at least 115 billion barrels, has offered 19 oil and gas fields to international companies for development in two major bidding rounds. The war-ravaged country is trying to boost revenues amid falling oil prices.
Iraq plans to add 4 million to 4.5 million barrels a day to its current daily production of 2.4 million barrels over the next four to six years.