The price of oil has more than halved since scaling record heights above $147 a barrel in mid-July.
Solagh said that despite the considerably slashed figure, Iraq’s national budget remained higher than $48bn for the current economic year.
Mr. Solagh also stated that 25% of next year’s budget – equivalent to around bn – will be allocated to develop the country’s crumbling infrastructure.
However, this investment pales in comparison to the estimated figure require to rejuvenate the remaining remnants of Iraq’s war-torn landscape.
It is approximated that Iraq, home to the world’s third largest level of oil reserves, requires in the region of $400 billion to repair the damage of a battle-weary nation. The budget allocation is fundamental for the economy to bring foreign investments back into sectors such as electricity, oil, refineries, housing and banks, Solagh said during the Iraqi officials meeting with the IMF.
Iraq currently produces around 2.5 million barrels a day (bpd), mostly for export.
Long-running sanctions and repeated violence have, however, had an immeasurable impact the nation’s ability to improve production levels.
Analysts expect that the halving of oil prices over the past three months will have dire consequences for the day-to-day running of the Iraqi economy.
Iraq’s revenues from crude oil are expected to slump by at least 60% during 2009 unless they recover from their present levels of around $65-$70 dollars a barrel amid the global credit crunch.
Meanwhile, Iraqi officials have committed to a date – 2012 – for bringing both stability and security to the oil industry in the region. Major General Hamid Abdallah, head of the Iraqi Oil Police Directorate, said that his forces, which were created as recently as 2003-2004, were capable of taking over the responsibility from the defense ministry provided that they received larger funding allocations.
The specially formed directorate has ten battalions, of 750 men each, and by 2012 there are set to be 22 battalions with exclusive responsibility for monitoring the infrastructure of Iraq’s most valuable commodity.
Since Saddam Hussein’s American-induced fall in 2003, Iraq’s oil infrastructure has been a regular target for attacks by opportunistic insurgents.