ERBIL, Kurdistan Region - The UK and the Iraq Economic Contact Group (IECG) on Monday urged the Iraqi government to use increased revenue from oil exports to combat soaring global food prices, and to enact economic reforms to strengthen the agricultural sector and food security in the country.
In a statement posted by the UK embassy to Iraq, the IECG issued recommendations for the Iraqi government to tackle the growing food prices caused by the Russian invasion of Ukraine and to mitigate the impact this will have on food security in Iraq by using higher oil revenue. This way, Iraq can ensure the protection of its most vulnerable communities and its agricultural sector, according to the statement.
The IECG was launched by the G7, European Union, and the World Bank in 2020 to support the government in implementing much-needed economic reforms.
The group pledged to continue supporting economic reforms, social programs, and the agricultural sector in order to protect the most vulnerable groups in Iraqi society. It added that the reforms would assist the people by “strengthening food security in Iraq and increasing employment opportunities.”
Prices of flour and cooking oils have skyrocketed in local Iraqi markets, sparking large demonstrations in the southern city of Nasiriyah earlier this month. Iraqi officials blamed the conflict in Ukraine for the sudden price increase, AFP reported.
The Iraqi government recently announced a series of measures aimed at confronting the global price increase, as well as suspending custom duties on food products.
The Iraqi government also announced a package in early March, providing 100,000 dinars ($68) to public servants on low income.
The Iraqi government is dependent on oil revenues to cover its costs and pay the salaries of civil servants. Despite suffering in much of 2021 due to record low oil prices, the country’s economy is once again booming as oil prices are increasing globally.
Global oil prices have been on the rise since the war in Ukraine began on February 24, and the US has also repeatedly urged OPEC members to increase oil production in order to stabilize the market. Iraq is also part of the agreement on production levels.
Russia’s invasion of Ukraine has led to a significant increase in food prices in Iraq and the Kurdistan Region, including a spike in the price of wheat and cooking oil.
Russia is the world’s top wheat exporter and Ukraine is known to be the breadbasket of Europe, with Middle Eastern states heavily reliant on Ukrainian agricultural products.
The price of fuel has also dramatically increased in the Kurdistan Region with many drivers waiting for hours in queues to buy cheaper benzene provided by the Iraqi government.
