NEW YORK, 17 February, 2021, (TON): The top UN envoy for Iraq on Tuesday, February 16, warned about the fragility of Iraq's economy despite recent increases in oil revenues.

Iraq continues to experience acute financial and economic difficulties, as reflected by the exceptional devaluation of the Iraqi dinar by over 20 percent in late December, said Jeanine Hennis-Plasschaert, the UN secretary-general's special representative and head of the UN Assistance Mission for Iraq.

A nearly 40 percent increase in oil revenues since November 2020 has eased the liquidity crisis, providing some breathing room for the government. Now, the projected continued increase in oil prices is expected to allow the government to move forward on pressing matters such as public service delivery and civil servant salaries, she added.

But unfortunately, little progress has been made on the implementation of much-needed reform measures as described in last year's economic white paper. It, therefore, bears repeating that Iraq can afford neither continued dependence on resource extraction, nor the excessive burden of an outsized public sector, she told the Security Council in a briefing.

The fight against economic and political corruption, the promotion of robust governance, transparency and accountability, must all be the watchwords accompanying such reform, she added.

"As I have consistently pointed out in the past, numerous opportunities for meaningful and necessary reforms have been wasted since 2003. And it is past time to prioritize sustainable economic diversification, as well as the development of a value-adding, employment-generating private sector," she said.

"I repeat: a dependence on volatile commodity prices is no strategy at all, and ultimately, can only backfire," the UN envoy said.

Nearly two decades after the 2003 war, Iraq finds itself at a crossroads: caught in a fragility trap and faced with increasing instability and multiple crises, Iraq is projected to have the worst annual GDP growth performance since the fall of former Iraqi President Saddam Hussein.

However, Iraq’s oil wealth allowed the country to obtain upper income status, while in many ways the country’s economic outcomes resembled a low-income fragile country.